Sen. McGuire responds to bed tax bill concerns

Some desert cities first voiced opposition to Senate Bill 1102 on Monday, a bill they believed would allow the state to collect and pocket local transient occupancy taxes, or bed taxes.

Sen. McGuire, the author of the bill, said it’s quite the opposite and he wanted to set the record straight. If the law gets passed it will require online vacation rental companies like Airbnb and VRBO to charge a bed tax and by law, 100 percent will go back to cities and counties where the rental homes are located.

“It collects the bed tax at time of checkout. It remits every penny back to the city or county of origin … It puts into law forever that bed taxes stay local. It’s simple, but it’s going to have a big impact,” said McGuire.

On Monday, Councilman Russell Betts said he was worried the bill would strip the city of Desert Hot Springs of tourism money. After speaking with McGuire’s staff, Betts still doesn’t support SB 1102.

“Certainly Senator McGuire is well intentioned, but this for us is a solution without a problem,” he said.

McGuire said only seven cities in California collect the bed tax from online vacation rental companies. The rest get collected by the rental homeowners.

“Most cities are unable to collect these taxes because they can’t get an agreement with Airbnb, VRBO or Flipkey,” he said.

McGuire added, cities will finally know the total number of vacation rentals, total number of nights booked and total amount of taxes collected, without releasing specific addresses. The audit costs are covered by the online vacation rental company.

“Taxpayers don’t pay for that audit, 100 percent will remain with the local government,” McGuire said.

Betts said SB 1102 is not well-written and difficult to make sense of.

“It needs to get cleaned up. The language is problematic,” he said.

In a letter of opposition, the League of California Cities points out the bill would close the door on other important local laws that regulate short-term rentals for health and safety purposes.

“A local issue is much better handled locally than up in Sacramento,” Betts said.

Sen. McGuire said he’s available to discuss SB 1102 with city or county leaders who have concerns about the bill.