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SALEM, OR-Before calling it quits last week, the Oregon State Legislature approved House Bill 2267, creating a statewide 1% lodging tax that will be spent on promoting the state as a vacation destination.

Gov. Ted Kulongoski is expected to sign the bill into law next month. The tax, which would be in addition to local lodging taxes, takes effect Jan. 1, 2004. It will generate an estimated $7 million annually, tripling the budget of the Oregon Tourism Commission.

The Tourism Industry Association of America last year ranked the state 46th in tourism spending. The new tax will boost the commission’s budget from $3.4 million to about $10 million, putting the state’s tourism budget in the middle of the pack nationally.

In addition to creating a new state lodging tax, HB 2267 also restricts how cities can spend their future tax revenue, requiring any increase in local taxes to be spent solely on boosting tourism. After languishing because of those restrictions, a compromise was eventually reached wherein local governments will be required to spend 70% of any increase on tourism. Moreover, the definition of what would constitute a tourism-boosting project has been loosened.

About one-third of the state’s 240 cities have local lodging taxes. The average surcharge is about 8%, with the proceeds for services such as police and firefighters as well as tourism promotion.

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