On August 21, Grand County officials addressed the Utah State Legislature’s interim Committee on Revenue and Taxation regarding a recent audit that accused the county of abusing tourism-related taxes.

The audit, presented June 21 by the Utah State Auditor’s Office at the Capitol, found a “consistent pattern” of Grand County using earmarked tourism tax revenue for unauthorized purposes, suggesting “intentional abuse rather than an uninformed error.”

Tourism taxes include the Transient Room Tax (TRT), a levy imposed on accommodation establishments to generate revenue used to promote tourism, fund convention facilities and support local economic development. The audit also found misuse of funds collected through the Tourism, Recreation, Culture, Convention and Airport Facilities Tax (TRCC).

In its formal response to the audit, the Commission acknowledged some errors and outlined corrective measures, but claimed that many problems were due to “different interpretations” of the TRT and TRCC statutes.

A 2019 audit had previously highlighted the desire of counties, particularly those with national parks like Grand County, for more flexibility in how they spend TRT funds. While some changes have been made, Commission Chairman Jacques Hadler and others in the county believe more flexibility is needed to curb tourism and pursue broader spending purposes.

“If you bring a whole lot of people into the city, it’s going to have an impact,” Hadler told The Times-Independent. “There’s going to be more garbage generated, there’s going to be more accidents, there’s going to be more emergency responders, so anything we can do through TRT to alleviate those problems is very useful and necessary.”

At the meeting, which also featured several other presentations, State Senator Dan McCay stressed the importance of ensuring compliance with existing laws before considering changes, adding that the audit’s findings would serve as a model for other Utah counties on how to properly use tourism funds.

“If you start funding things with extracurricular activities that are not allowed in the regulation or the law, you’re going to lose a lot of respect and trust. And I don’t think you’re going to get very far with that, even the idea of ​​adding things that (TRT) can fund.

The Commission voted “no” on 16 July to formally accept the results of the review and implement its 13 recommendations.

Commission Vice Chairman Kevin Walker argued that adopting the recommendations would shift the tax burden from tourism to property taxes, but the county has already agreed to take some corrective measures.

According to Seth Oveson, director of the local government division in the state auditor’s office, a follow-up audit is expected in about four to five months to verify compliance with previous recommendations.

Presentation of the test report

In their presentation to the committee, state auditors John Dougall and Oveson said the audit raised concerns that Grand County had invested too little in promoting tourism and too much in mitigation measures.

They cited examples such as trail ambassadors and etiquette videos, which they said were incorrectly classified as promotional efforts rather than tourism impact management.

Later in the meeting, State Rep. Rosemary Lesser said it was a matter of interpretation as to which category they fell under.

“A lot of marketing is done on social media these days, so if you have a Tik Tok of a trail ambassador that goes around the world, who knows how many people are going to see something like that?” she said.

The audit also found that Grand County inappropriately used tourism funding for economic development salaries and also inappropriately used TRCC funds for Grand Center.

Dougall and Oveson noted at the meeting that Grand County did not comply with generally accepted accounting principles (GAAP) for prepaid expenditures made for future periods close to the end of the county’s economic diversification program in June 2023.

Oveson explained that Grand County mistakenly believed it had to spend the funds by June 30 instead of simply stopping collection.

Dougall clarified that the county had invested money in a revolving loan fund at the time, so economic development activities could use those funds raised under the old rules and can continue to use them until they are fully spent.

“If this is not the intention of the legislature, then a legal clarification in the sense of a spending restriction rather than a tax restriction would make sense,” he said.

Commission reply

In his response at the meeting, Walker said Grand County had made a diligent effort to comply with GAAP principles and had sought clarification from the state auditor’s office. They were told to consult their attorney, who advised them to spend the funds earmarked for economic diversification before the program ended.

“We worked with our accountants and they assured us that it was GAAP compliant,” he said. “I think this seems like a relatively close, technical disagreement, but we certainly tried to spend the funds the way they were properly intended.”

During the discussion, State Senator Lincoln Fillmore suggested that the disagreements on the part of the Audit Office and the Commission could be due to “reasonable, perhaps unclear, interpretations of the law.”

Walker also pointed out in his presentation that the law regulating TRT spending covers a wide range of tourism activities and not just advertising.

“It’s not just an advertising budget, it’s the whole package for tourism,” Walker said.

According to the law, the funds can be used to establish and promote tourism. Tourism is defined as follows: “An activity to develop, support, recruit or market tourism that attracts temporary visitors to the county, including planning, development and advertising…”

Walker added that planning and development could include communicating with potential visitors to Moab to ensure they stay on the trail and carry enough water so as not to overwhelm Grand County Sheriff’s search and rescue personnel.

He noted that many counties, including Washington, Weber and Summit, recently told them they would use the TRT advertising assets for similar messaging. This type of messaging, Walker argued, is also consistent with the state’s Forever Mighty program, which promotes responsible tourism.

Hadler advocated for more flexibility in how the TRT funds are used, especially for rural counties like Grand County, which struggle with significant tourism-related infrastructure problems. He added that during peak season, Grand County could have a population of 40 to 50,000.

Under current statutes, tourism mitigation includes solid waste disposal, emergency medical care, search and rescue, law enforcement and road repairs.

“The ability to use mitigation funds for things like this is critical for us,” Hadler said.

He proposed changes to the law to increase the proportion of TRT funds used for damage control, clarify the wording of the laws, and maintain flexibility in spending the funds raised by TRT.

Legislative Committee discusses TRT

State Rep. Brady Brammer said he sees a “pattern of disregard for state law by Grand County officials,” noting that the county had sought more flexibility in how it spent TRT funds in 2019.

However, he argued that the county would have made the planned spending even if Grand had not implemented the desired changes.

“You pushed the boundaries here and did what you wanted, even if you didn’t get your way (in 2019) and spent the money in a way you shouldn’t have,” Brammer said.

He added that he was reviewing “enforcement mechanisms” because he feared a “hostile approach” to the state’s tourism-related tax law.

“Why should we listen to the advice of someone who ignores the law, or at least tries to operate on the fringes of the law, and how to change the law to their advantage?” he said.

McCay shared Brammer’s concerns but went in a broader direction, warning against over-reliance on TRT to fund public safety and infrastructure projects in Utah.

“TRT is the ultimate fulfillment of the age-old adage: Don’t tax yourself, don’t tax me, tax the guy behind the tree,” McCay said.

Ultimately, Dougall said Grand County had “pushed the boundaries” of acceptable use of TRT funds, and at times exceeded them in terms of tourism promotion versus damage control.

Hadler told The Times-Independent that the county went to that limit because it wanted to do everything possible to use the TRT funds in other, necessary ways, but he said he had valid counterarguments to the audit.

“I would strongly reject the idea that we have gone too far,” he said. “… We have made every effort to comply with the letter of the law.”