Giving Local Communities More Flexibility with Transient Lodging Tax Revenue

Apr 1, 2026 | AOC Advocacy, Governance, Revenue, & Economic Development

After over two decades of largely preempted local transient lodging tax (TLT) revenue distribution authority, AOC and a broad coalition of local government partners passed a local TLT flexibility bill (House Bill 4148) this session. The long-sought legislation increases local government discretionary TLT revenue by 20%, allowing more investments that meet the needs of residents, visitors, and businesses alike. 

Since 2003, Oregon law has required that at least 70% of any new or increased local lodging tax be spent on tourism promotion or tourism-related facilities, leaving only 30% available for core local government services. While that structure initially helped grow Oregon’s tourism economy to the benefit of tourist destination communities, unintended consequences began to arise for residents and local governments. Increases in seasonal visitation – some by five or ten fold – creates real challenges for communities limited in their ability to invest in the infrastructure and services that both residents and visitors rely on. Oftentimes, residents were left footing the bill via their property taxes. 

HB 4148 represents a compromise between local governments and the tourism industry. It allows communities the option to adjust the split from 70/30 in favor of tourism promotion to 50/50. This optional adjustment allows up to half of TLT revenue to be used for general fund purposes, while still requiring at least 50% to support tourism-related efforts.

In practice, this gives cities and counties more flexibility to respond to current realities. Communities facing increased demand on public safety, roads, parks, water systems, and emergency services — particularly during peak tourism seasons or in response to repairing infrastructure after visitors leave — will now have more tools to keep up with the rising costs and strain. The bill maintains a strong commitment to tourism, while also recognizing that thriving destinations depend on well-functioning public infrastructure.

During the 2026 session, AOC led a coordinated advocacy effort among local government partners driving the political strategy in partnership with the bipartisan bicameral bill sponsors. AOC’s engagement efforts included issuing action alerts encouraging members to provide testimony, coordinating public hearing panels with local government officials, and actively meeting with legislators to vote-count the bill, educate policy makers, and help shape amendments.

AOC’s lobbying efforts would not have been successful without the sustained, united efforts of county elected officials who visited Salem on multiple days to help elevate the on-the-ground impacts this policy change would address. AOC members from across the state met with legislators one-on-one, provided testimony during both public hearings, and stayed late during work session days to observe final committee votes on the bill. The success of this legislation epitomizes the ethos of “United Counties. United Oregon.” When counties come together, historic gains can be accomplished.

Updates to local TLT revenue splits, codified in ORS 320.350, will go into effect Jan. 1, 2027. Counties can apply the 50/50 split to all net revenue collected before, on, or after Jan. 1, 2027 (see Sections 1-3 of HB 4148 Enrolled). The bill outlines new reporting requirements regarding the collection and spending of local TLT revenues. AOC will work closely with our partners at the League of Oregon Cities to develop a streamlined system that allows counties and cities to submit this data to their respective state organizations while meeting all the reporting requirements mandated under this section. 

Contributed by: Justin Low | Legislative Affairs Manager