Sunday, June 15, 2025
Oregon is known for its stunning coastlines, lush forests, and urbanized cities and draws millions of visitors each summer. But underlying this economic boom is roiling discontent among local residents and municipal governments about strict state controls on how to spend revenues from lodging taxes. Towns such as Seaside, Sutherlin, and Bend are struggling with rising pressures of overtourism, fueling statewide controversy and legislative measures to revamp the state’s tourism industry.
Seaside’s Tourism Dilemma: Too Much of a Good Thing
Every year, Seaside welcomes over 2 million visitors, flooding its streets, beaches, and businesses. These tourists significantly boost the local economy, but their impact also burdens city resources, including road infrastructure, emergency medical services, and waste management systems. Despite this, Oregon law mandates that 70% of lodging taxes must be spent exclusively on tourism promotion. Consequently, Seaside has accumulated approximately $11 million in restricted funds, which cannot currently be used to alleviate tourism-related challenges directly.
Growing Statewide Discontent
Seaside’s predicament mirrors concerns in other Oregon cities, including Sutherlin and Bend, where residents and local officials increasingly question whether tourism’s economic benefits outweigh its associated costs. Sutherlin, though smaller and less touristic compared to Seaside, faces similar challenges. Events like the annual Blackberry Festival Car Show & Cruise attract substantial crowds, placing severe stress on city infrastructure, police forces, and environmental health.
Legislative Push for Flexibility: House Bill 3962
Responding to these widespread concerns, Oregon lawmakers introduced House Bill 3962, proposing significant reforms to lodging tax spending rules. Sponsored by Rep. Cyrus Javadi (R-Tillamook), Rep. Jules Walters (D-West Linn), and Sen. Suzanne Weber (R-Tillamook), the bill seeks to grant cities greater flexibility, allowing more funds to be allocated towards essential services directly impacted by tourism, such as police, fire services, emergency medical services, and infrastructure improvements.
Under HB 3962, the mandatory allocation for tourism promotion would reduce from 70% to 40%, providing local governments the discretion to use the remaining 60% for broader tourism-related municipal needs. This proposal has garnered substantial support from local officials across Oregon, including mayors from North Bend, Albany, Enterprise, and McMinnville, as well as county commissioners from Union and Hood River.
Opposition from Powerful Tourism Interests
The proposed legislation faces staunch opposition from influential tourism advocacy groups, particularly the Oregon Restaurant and Lodging Association (ORLA) and the state’s regional destination management organizations (DMOs). These entities argue the lodging tax was designed explicitly to foster tourism and economic growth, warning that diverting funds to general municipal services undermines the original intent and could negatively impact tourism revenue, especially during the off-peak seasons.
Greg Astley, an ORLA director, strongly criticized local government requests to divert tourism funds, emphasizing that inadequate marketing during shoulder seasons hurts hotel businesses significantly. Conversely, city officials like Seaside’s Mayor Wright refute these claims, insisting that substantial offseason promotions already exist and highlighting the impracticality of increasing marketing budgets when visitation rates already strain local capacities.
Oregon’s Lodging Tax: Historical Context
Established in 2003, Oregon’s statewide lodging tax was initially enacted during a period of high unemployment to rejuvenate the state’s economy through tourism. This tax, originally set at 1%, successfully boosted tourism, generating an estimated $241 million annually in lodging taxes and supporting approximately 120,000 jobs statewide.
However, the fixed allocation structure—70% dedicated to tourism promotion—has increasingly drawn criticism from communities experiencing overtourism. Critics argue the outdated mandate fails to account for contemporary realities, emphasizing the necessity of modernizing the law to reflect current economic, social, and environmental challenges.
Overtourism: A National and Global Issue
The Oregon controversy reflects broader national and global dialogues concerning overtourism and sustainable tourism practices. Todd Montgomery, director of Oregon State University-Cascades’ Sustainable Tourism Lab, notes a significant rise in tourism-related legislative actions nationwide. Over 500 bills addressing overtourism have been introduced across 33 states this year alone, demonstrating widespread dissatisfaction and demand for systemic change.
Balancing Tourism Promotion and Local Needs
Cities across Oregon advocate for a more balanced approach, enabling them to manage tourism sustainably without compromising quality of life for residents. Lawmakers supporting HB 3962 emphasize that the proposed changes are essential for ensuring equitable distribution of tourism-related benefits and addressing community concerns effectively.
Additionally, lawmakers seek reforms within Travel Oregon, the semi-independent state agency responsible for managing and distributing lodging tax revenues. Current governance structures grant the hotel industry significant representation on Travel Oregon’s board, which some legislators argue creates inherent conflicts of interest and inefficiencies in resource allocation.
Path Forward: Legislative and Community Actions
HB 3962 advanced from committee discussions on June 12, with expectations it will pass the House floor. However, uncertainty remains about its fate in the Senate before the legislative session concludes on June 29. Governor Tina Kotek has yet to publicly express her stance on the bill.
For cities like Seaside and Sutherlin, successful passage would represent a critical victory, empowering local officials to tackle overtourism-related challenges directly and sustainably. Conversely, tourism industry representatives warn that the reallocation could inadvertently harm tourism-dependent economies, urging lawmakers to consider comprehensive and collaborative solutions.
Navigating the Future of Oregon Tourism
Oregon’s ongoing controversy reflects the imperative for sustainable, equitable policies for tourism touching on both economic resilience and local welfare. Passage of HB 3962 would potentially reshape state management of tourism, establishing significant precedents for other areas struggling with comparable conundrums.
As this dialogue progresses, cooperation among legislators, travel associations, and local populations will become essential for developing a sustainable and just tourism agenda. What results from this effort will inform how to manage tourism, both within Oregon and, potentially, elsewhere globally for regions with similar circumstances.
