With $1 billion at stake, the challenge was going to happen at some point.

City Attorney Jan Goldsmith and the City Council flinched Tuesday morning as a proposed extension of a tourism promotion charge on hotel rooms went before the council. At Goldsmith’s request, the council continued a hearing on the charge. It likely will return to the council Sept. 26.

The local hotel workers’ union protested that the extension is an illegal tax increase unless it faces a public vote.

Anyone who stays in a San Diego hotel room pays a 10.5 percent tax on their bill. Visitors at most hotels pay an additional 2 percent charge that hoteliers want to extend it for 40 years. The extension of what’s known as the Tourism Marketing District would result in more than $1 billion in tax dollars going toward tourism promotion.

The charge has been in place since 2008 without voter approval. But Proposition 26, a ballot measure passed by state voters last November, tightens the levying of charges without a public vote.

“It is unacceptable to allow a subsection of a powerful and politically-connected hotel industry to grab control of over $1 billion in taxes for their own purposes without a public vote,” Andrew Kahn, an attorney representing the union, wrote in a Sept. 12 letter to the council.

The Prop. 26 question has hung over both the tourism charge and the $550 million plan to expand the city’s Convention Center. Three-quarters of the project’s financing is supposed to come from a similar 1 percent to 3 percent charge on hotel rooms on top of the regular tax and the tourism charge. That means the effective hotel-room tax rate would be 15.5 percent in some areas of the city.

Convention Center boosters have hoped another city would get sued over Prop. 26 so San Diego wouldn’t have to deal with it.

Mike McDowell, a hotelier who is the primary advocate for extending the tourism charge, said he expected a legal challenge at some point. But the source surprised him. The charge helps the hotel industry and its workers, he said.

“It’s just a mystery to me why they think this challenge is something that would benefit their workers,” McDowell said.

Goldsmith has said that the tourism charge likely doesn’t need a public vote under Prop. 26.

Liam Dillon is a news reporter for voiceofsandiego.org. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?

Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

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Liam Dillon

Liam Dillon was formerly a senior reporter and assistant editor for Voice of San Diego. He led VOSD’s investigations and wrote about how regular people...

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