Port Angeles – How much of the nearly $1.5 million collected annually in Lodging Tax Funds in Port Angeles should be spent on paying City staff to administer the applications for tourism projects?
That the question being grappled with between City officials, City Council, the Lodging Tax Committee and some local residents.
City officials say that as the funds collected for the so-called “heads in beds” tax, paid by tourists, continues to grow each year, much more time is spent by City staff pouring over the applications from tourism-related entities looking for a piece of those funds.
In recent years, the percentage of those funds collected by the city for administration costs has been under 4% per year. The City is now asking the City Council to approve 12%, or $134,000, starting this year.
One local resident that thinks the ask is excessive is Steve Pelayo, who spoke at Tuesday’s council meeting.
“Secondly, the numbers themselves really speak for themselves here. You know, in 2025 the City said it took about 587 hours, $55,000 dollars, to administer the LTAX fund. Now they want to raise that by about 130/140 percent. For the record, lodging taxes were up three percent last year. They’re up six percent in the last two years. In the two-to-three percent type range. And you guys know I did talk to Directors of Finance at Walla Walla, and Pullman, Ellensberg and Leavenworth, and many of these cities don’t even charge an administration fee. So to me, this is not a common practice. It’s wrong to suggest that it is, especially at this magnitude. And really, what bothers me the most is that everyone involved knows this.”
After a presentation from staff and some discussion, Council passed a resolution adopting the updated 2026 LTAC Funding Work Plan. The resolution simply adds guidance to include the requested 12% lodging tax allocation.
Mayor Kate Dexter, who is also the Chair of the Lodging Tax Committee, voiced her support for the resolution.
“I think it’s important that we are not using general fund dollars to subsidize this committee and the administration of the lodging tax. I understand that it’s frustrating, because administration isn’t necessarily heads in beds. But it is facilitating the grants to get those heads in beds. And if statutorily this committee can pay for itself, then I think that is what needs to happen. So, I am going to support the motion and I guess I’ll have the opportunity to talk about it again in March.”
Tuesday’s vote does not mean it’s a done deal. In March, the LTAC will re-convene to deliberate and submit a recommendation to the Council for final approval in April.
If recommended by the committee and approved by Council, 12% of this year’s Lodging Tax Budget will be dedicated to staff oversight and administrative costs.