RES-10394 Opposing California Senate Bill X6 2 SB 2RESOLUTION NO. 10394
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE, CALIFORNIA OPPOSING
SENATE BILL X6 2 (SB 2), A BILL SINGLING OUT
ON-LINE TRAVEL COMPANIES
FOR PREFERENTIAL TREATMENT IN THE
TIMELY PAYMENT OF TRANSIENT OCCUPANCY
TAXES.WHEREAS, pursuant to the California Constitution, Article 13, Section 32,
persons who seek to challenge the imposition of a tax must first pay the tax prior to filing a
legal challenge to the imposition of the tax;
and WHEREAS, the City incorporated this constitutional principle in Orange
Municipal Code Section5.02.065, which requires that specified persons and entities owing
specified taxes must first pay the taxes before instituting a legal action challenging the taxes;
and WHEREAS, Senate Bill X6 2 (SB 2) provides that travel agencies, including
on-line travel agencies, and their intermediaries would be exempted from paying
transient occupancy taxes prior to filing a legal challenge
thereto; and WHEREAS, it is clear that SB 2 was brought forward by lobbyists for
on-line travel agencies due to the fact that administrative and court decisions have been
siding with cities,finding that on-line travel agencies have for years collected millions
of dollars in transient occupancy taxes from hotel guests and then wrongfully
converted these collected transient occupancy taxes to
their personal use; and WHEREAS, SB 2 is inconsistent with the California
Constitution principles that are embodied in Article 13, Section 32, Orange MunicipalCode Section 5.
02.065 and the ordinances of cities
throughout the State; and WHEREAS, numerous cities, including the City of Orange,
rely significantly on the timely payment of transient occupancy taxes to help pay annually for
police, fire, and other vital general fund services, which services could be jeopardize
by SB 2; and WHEREAS, on-line travel agencies are taking an ever
increasing share of the hotel room booking business, including the responsibility
for billing, collecting and remitting transient occupancy taxes to cities, thus delays
and underpayments of transient occupancy taxes are having an increasingly significant effect
on cities' revenue streams; and WHEREAS, on-line travel agencies already
have the benefit of an administrative hearing before a neutral fact-finder to
challenge the payment of transient occupancy taxes prior to payment to cities and timely payment thereof
is of no significant burden to on-line travel agencies because they have
already collected the taxes from their customers and simply need to properly
WHEREAS, the City has instituted collection activities against on-line
travel agencies to recover significant sums in transient occupancy taxes that the City believes
the on-line travel agencies have wrongfully converted to their personal
use; and WHEREAS, SB 2 would provide an incentive to on-line travel
agencies to continue to wrongfully withhold taxes that are due and owing cities and singles out
such entities for favorable treatment not enjoyed by others
under the law.NOW, THEREFORE, BE IT RESOLVED BY THE CITY
COUNCIL OF THE CITY OF ORANGE, that the City Council opposes Senate Bill 2 because
it is inconsistent with the principles established in the California Constitution, the Orange
Municipal Code and other ordinances of cities across the state; it treats travel agencies
and their intermediaries differently and more favorably than similarly situated entities in violation
of the principles set forth in the equal protection clauses of both the California and
United States constitutions;and it has the potential of creating significant financial hardship for cities at
a time when cities can
least afford it.ADOPTED this 12th day
of
January, 2010.ti C rolyn vec e Mayor,
Cit
f Orange ATTEST:Mary E. ,City
Clerk, Ci range I, MARY E. MURPHY, City Clerk of the City of Orange,
California, do hereby certify that the foregoing Resolution was duly and regularly adopted by the
City Council of the City of Orange at a regular meeting thereof held on the 12th day of January,
2010, by
the following vote:AYES: COUNCILMEMBERS: Smith, Murphy,
Cavecche, Dumitru, Bilodeau
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
ABSTAIN: COUNCILMEMBERS: None Mary u ,City