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SAN DIEGO—A council committee has backed away from a proposal to raise the city’s transient occupancy tax. Proponents of the tax are racing to get it passed before Proposition 218, an anti-tax provision on the March ballot that could make future hotel tax increases difficult or impossible. But city officials are also grappling with a soft economy and the Sept. 11 attacks that have hurt the area’s hospitality and tourism industries.

Supporters, led by the San Diego Firefighters Association, want to increase the TOT from 10.5% to 13.5%. San Diego Mayor Dick Murphy, chair of the council’s Rules Committee, directed the city manager to study the proposal.

The proposed tax hike has dumbfounded local tourism officials. Hotel occupancy rates have plunged and thousands of hotel workers have been laid off in recent weeks following the attacks.

On Wednesday, the Rules Committee listened to hoteliers’ complaints and then decided unanimously to reject the increase. However, city staff was directed to look at more modest proposals and report back by November, in plenty of time to get a measure on the March ballot.

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