[Editor's Note: This is part 4 of a series of articles that will cover the Grant County Commission work session of Jan. 10, 2023, as well as the regular session of Jan. 12, 2023.)
By Mary Alice Murphy
At the regular meeting of the Grant County Commission on Jan. 12, 2023, they began with election of Commission officers. District 1 Commissioner Chris Ponce was re-elected as chairman.
Ponce nominated District 4 Commissioner Billy Billings as vice chair, much to the current vice chair District 5 Commissioner Harry Browne's surprise. "I did not realize that you were dissatisfied."
District 3 Commissioner Alicia Edwards jumped in and said: "It is completely my fault. I failed to have a conversation with Commissioner Browne about this."
Ponce said: "Commissioner Browne, you're done a great job. Perhaps a bit down the road there will be an appointment for you. I sincerely apologize."
Commissioners approved Billings as vice chair.
Next a public hearing addressed an ordinance entitled An Ordinance Imposing a Lodger's Tax and Providing for the Use of Said Tax, Setting Forth Definitions, Providing for Exemptions and Establishing Administrative Procedures.
Bruce McKinney was sworn in to speak. "I own two houses that are vacation houses. I'm not opposed to this ordinance; I just think it will be inefficient and not have the intended effect. The 5 percent lodger's tax rate is not a change in amount, but the new ordinance has more details and includes auditing. I use Air BnB and VRBO to book the houses, plus through a website and the Chamber of Commerce. When we get references through the chamber and the website, we pay the lodger's tax. But through Air BnB and VRBO, we are required by the state to take out gross receipts taxes. We would receive notices from the state, and we would like a way to add on the GRT to the renter's payment, but there is no way to do it. We voluntarily pay the lodger's tax. A lot of renters are not paying the tax. There is no way to audit it. We're in the county, not Silver City, so we don't have to pay the tax ourselves and want to collect from the renter. If it were added to the rent, it would put us at a 5 percent disadvantage to others who don't pay the tax. According to my accountant, there was some precedence."
He cited a VRBO example, with all the layers of costs, which include a VRBO guest service fee, a base commission, a cleaning fee and pet fees. "It is hard for us to figure out what amount is the lodger's tax. We would like for Air BnB and VRBO and others like it to collect it for us. How will you audit it? Will you call VRBO and ask them? It's a voluntary tax. Unless you put pressure on the state to collect the tax, it's going to be hard to get."
Becky O'Connor, 20-plus-year chair of the Grant County Lodger's Tax Advisory Board said the only real change in the ordinance is removing the exemption for those who have only one or two bedrooms for rent. "As for what the tax is applicable to, it is only applicable to the rental rate. For example, $100 a night. Air BnB and VRBO, the two biggest rental agencies, started to collect the tax a couple of years ago because it's an internet tax. I have one room at our Gila Guest Cottages on Air BnB, with no cleaning fee. We charge $100 a night and Air BnB puts on top of that a 13 percent to 15 percent fee. I am paid the nightly fee minus 3 percent. I am told how much the tax is that is charged. If I have to pay lodger's tax, which I already do, but in this case, I would add the 5 percent to the rate and charge $105. It is not the responsibility of Air BnB or VRBO to collect lodger's tax. The problem with lodger's tax and those other taxes is that they are based on zip code. For instance, Bear Mountain Lodge has a Silver City zip code, so Silver City will benefit from the lodger's tax. The same thing with lodger's tax is it comes straight back to us, but the us in some cases is Silver City, not the county. It is far better for the county to continue to collect lodger's taxes itself."
Edwards noted that when lodger's tax is self-reported, and the lodging is in the county, it will benefit the county.
"I see it as requiring everyone to be responsible, not just Bruce," O'Connor said. "The main purpose of the lodger's tax is to do marketing to put head in beds for events."
Browne said he didn't see any way around it. "It's mildly annoying that the booking charge for lodger's tax is on top of fees. If there a way to charge the lodger's fee quarterly rather than monthly?"
O'Connor said she would not be keen on that, because the amount might become too large, and the money isn't there. "If you do it monthly, it's easier to remember and can be kept to smaller amounts.
Browne said he thought it should be size-related or volume-wise.
Billings asked O'Connor to address the voluntary part.
"In this ordinance, it is no longer voluntary," O'Connor said. "And the ordinance states a penalty for late payment or failure to report."
McKinney said what he has been doing is reporting monthly, but now, only if they receive revenue. "Monthly if there is no revenue and no reporting is illegal with this ordinance. What are the plans to try to enforce this. Will you hire someone to call lodgings? Will you make the effort?"
Ponce said he knows that staff has tried. "We can discuss it with staff."
Edwards said the ordinance is for the vendor, not the county.
McKinney clarified that the only thing "we are being charged for is on the rental fee and Air BnB and VRBO are also charging on the rental fee." He noted that VRBO has a place on the form where you can say that there is a local tax that the renter will collect from the guest, but they don't do it accurately charging on the fees, too."
Edwards said: "I think you should just charge it on the rental fee only."
"What I don't want to happen is for honest people to pay and dishonest ones do not pay," McKinney said. "We try to follow the law. Many do not."
O'Connor thanked McKinney for way over the years, when technically he didn't have to. Yes, the only thing the lodger's tax is charged on is the room rate. Other fees are not subject to the lodger's tax. She also noted that monthly reporting with no revenue would require a simple zero on the report.
Billings asked County Manager Charlene Webb who people should talk to with questions about paying the tax.
Webb said they should talk to Planning Director Randy Hernandez or to O'Connor.
O'Connor said it is the responsibility of lodgings to inform other lodgings to pay the tax. "I ask the media who are here today to make people understand that they must pay lodger's tax if they are renting a room for even one night."
Edwards said having Hernandez in charge, "I think we will be collecting more. We are building on Becky's work to put heads in beds."
The hearing closed and consideration of the ordinance began.
Browne asked about having two tiers of tax, with monthly or quarterly being paid.
Webb said the staff would prefer monthly. "We have a responsibility to the state to report monthly. It is easier for us to keep up by doing it monthly. Tiers would put an additional onus on the staff. This is a simple ordinance for vendors to comply with."
"I appreciate your explanation," Browne said, "but we can't be responsible for things they haven't been collected. Vendors should do the work. The rate is an unnecessary requirement."
"I understand what you're saying," Webb said, "but we've been doing it monthly since 1991. And a simple zero will suffice for the reporting."
Edwards asked about a fillable PDF.
Hernandez said the form is available for people to fill out and mail to the county.
"Will vendors be able to pay online?" Edwards asked.
Deputy Clerk Connie Holguin said the clerk sends out the notices now.
"We will be responsible to collect the tax and give it to the treasurer," Hernandez said. "There may be an option to pay online in the future."
Webb said the intent of the ordinance is to streamline the process with only one office being responsible for reporting.
Browne suggested an amendment, but District 2 Commissioner Eloy Medina said it seemed to be clear.
"When it's been in place like this, why change it?" Ponce asked. "Changing it can create problems."
Billings asked if those who had one or two rentals would need a business license. The answer was a firm Yes.
Browne nitpicked whether one section should say "and" or "or."
Ponce replied: "We're getting into the weeds. It's self-explanatory."
Webb said she had been discussing it with the attorney during the commissioners' discussion on "whether changes can be made today and whether we can proceed today. If you start changing it, we have to make sure there are no legal ramifications."
Browne asked about expenditures and how the taxes will be used. "Do we currently use any lodger's tax to pay for collecting the tax?"
Webb said that would be part of the upcoming budget discussions. "On the 'and' or 'or,' the language is taken directly from state statute, so we cannot change it."
Billings noted it needed to be approved as is or "we disapprove it."
Commissioners approved it.
"Randy, can you let us know in several months how it is working?" Ponce requested.
Hernandez said he planned to report quarterly to the commissioners.
Webb clarified that, according to statute, if substantial changes would be made it would not be approvable.
O'Connor thanked the commissioners for approving the ordinance. "The intent was to level the field between those who were losing business to those who were not charging and paying the tax. As a small business owner myself, I'm strongly in favor of charging and paying monthly. The 30-day exemption is forever. There are no taxes on monthly rentals."
The next article will cover the Gila Regional Medical Center Interim Chief Executive Officer Greg Brickner's report.
For the preceding articles, please visit https://www.grantcountybeat.com/news/news-articles/76055-grant-county-commission-work-session-011023-part-1; https://www.grantcountybeat.com/news/news-articles/76085-grant-county-commission-work-session-011023-part-2; and https://www.grantcountybeat.com/news/news-articles/76114-grant-county-commission-work-session-011023-part-3 .