Memo for fiscal year 2018, updated 2017-04-18

[Archived] Question #66: What would the hotel tax need to be to fully cover the operations of the Trolley?


What would the hotel tax need to be to fully cover the operations of the Trolley?


The operating cost of King Street Trolley as proposed in the FY 2018 Budget is $952,938. The transient occupancy (hotel) base tax rate is 6.5% of the room charge plus $1 per room per night. Each additional 0.1% on the base tax rate would generate approximately $174,000, based on the FY 2018 projected revenue of $11.3 million from the transient occupancy base tax rate. Additionally, each addition $0.10 on the room tax would generate $120,000. To fully cover the operating cost of the King Street Trolley, the City would need to increase the base tax rate by 0.55% to 7.05% or increase the room tax by $0.80 to $1.80  The transient occupancy tax was last increased in FY 2009 by 1%, from 5.5% to 6.5%, and the $1.6 million in additional annual revenue was used to help fund economic sustainability initiatives such as the launch of the King Street Trolley service, CIP transportation projects, and land use and transportation planning staff resources. As a result, it would be difficult to again raise the City hotel tax indicating that it was to be used to fund the King Street Trolley.  

The City’s transient occupancy tax of 6.5% of the room charge and $1 per room night is one of several State and local taxes levied on hotel rooms in Alexandria. They include the following, which total slightly over 15% of each room’s cost.  


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