County's TOT revenue increases exceed 2018-19 amount by 24.9%

Joe Naiman

Village News Reporter

It was reasonably expected that the County of San Diego’s Transient Occupancy Tax revenue for fiscal year 2021-22 would be higher than for 2019-20 and 2020-21 when coronavirus restrictions reduced lodging, but the 2021-22 countywide total of $7,225,923.25 was 24.9% higher than the 2018-19 figure of $5,784,163.63.

The 2021-22 countywide total includes $255,199.24 collected in Fallbrook, $65,815.43 paid by Pauma Valley lodgers, and $7,743.89 of Bonsall revenue.

“A lot of changes have occurred,” said San Diego County Treasurer-Tax Collector Dan McAllister. “It’s reasonable to expect that the daily usage of these rooms would increase once things started to calm down.”

For the entire unincorporated county, collections totaled $5,387,799.05 between July 1, 2020, and June 30, 2021, including $411,798.69 from Fallbrook lodging facilities, $58,049.31 paid in Pauma Valley, and $3,678.55 of Bonsall collections.

During fiscal year 2019-20, the county collected $4,172,583.18 including $350,468.47 of Fallbrook revenue, $32,337.12 at Pauma Valley locations, and $3,487.83 from Bonsall lodgers.

The 2018-19 total amount includes $540,602.11 for Fallbrook (a late-received payment credited to the first quarter of 2018-19 rather than the fourth quarter of 2017-18 contributed to that increase as well as economic growth), $75,514.63 of Pauma payments (at the time Pauma also included Valley Center and Palomar Mountain as well as Pauma Valley), and $23,355.54 provided by Bonsall lodgers.

The Fallbrook total restores the Friendly Village to fifth place among unincorporated communities in San Diego County. For 2018‑19 and 2019‑20, Fallbrook ranked fifth with Rancho Santa Fe and Borrego Springs holding the top two positions each year, unincorporated San Marcos ranking third in 2018-19 and fourth in 2019-20, and unincorporated Escondido ranking fourth in 2018-19 and third for 2019-20.

Julian was sixth in both 2018-19 and 2019-20. The 2020-21 total for Julian of $425,724.85 exceeded that for Fallbrook, but Julian’s 2021-22 total of $490,469.60 returned that town to sixth place behind Fallbrook.

The Transient Occupancy Tax was reduced from 9% of the unit rate to 8% in August 2005 and is collected from occupants of hotels, motels, bed and breakfast venues, mobile home parks, private campgrounds, and other structures occupied or intended for occupancy by non-residents for lodging or sleeping purposes.

Campgrounds at county parks are not subject to the TOT. If a private campground has a membership program, a member or a member's guest is exempt from the TOT. A timeshare unit used by an ownership partner or an owner's guest is not subject to the TOT, although if a unit is rented to the general public, it is subject to the tax for that period.

The TOT is not collected for lodging facilities on Indian reservations or other areas where the county has no taxing power. The tax is not collected if the regular rent is $4 a day or less. A unit which is occupied or rented by the same person for more than 30 consecutive days is not subject to the TOT.

The facility operator must submit payment to the county on a quarterly basis by the last day of the month following the end of the quarter. If a facility ceases operation, payment must be made within 30 days after the operator ceases doing business, and if the venue is sold or its name is changed, the county must receive the TOT payments for occupancy prior to the sale or name change within 30 days of the transaction.

The TOT is collected only from lodging facilities in the county's unincorporated area, although the revenue is used for the county's Community Enhancement program and may be given to organizations in incorporated cities as well as unincorporated communities. Community Enhancement funds, which are allocated during the county's annual budget process, are intended to promote tourism including visitors from other parts of the county.

Various reasons other than decreased lodging can cause a decline of TOT revenue on a quarterly or annual basis from one year to the next. A facility may be closed for renovations or may outright cease business. Because a timeshare unit used by an ownership partner or an owner's guest or a private campground space used by a member or member’s guest is not subject to the TOT, the number of units available to the general public and thus subject to the TOT can vary from year to year.

A late payment or a payment postmarked by the deadline but not processed by the sixth of the following month will be reported for the following quarter, which can cause annual fluctuations. Some community losses may be due to a revision in the community definitions such as the 2019-20 revision which converted what was called Pauma into separate Pauma Valley, Palomar Mountain, and Valley Center designations.

The collections are listed by supervisorial district so, for some communities, revenues are listed separately for each district. The most recent redistricting took effect Jan. 1, 2022, so revenues in the areas affected by redistricting were transferred to the new district for the third and fourth quarters of the fiscal year.

“Even if it’s a little bit here and a little bit there, it can have an impact on certain areas,” McAllister said.

The number of active establishments in unincorporated San Diego County has risen from 291 in 2019-20 to 307 during 2020-21 to 363 in 2021-22. A total of 98 opened during fiscal year 2021-22 while 42 establishments closed during those 12 months. In 2020-21 a total of 59 establishments opened and 45 closed.