During the 2025 legislative session, Oregon local governments came closer than they have in more than two decades to modernizing how the local transient lodging tax (TLT) works. A reform bill (House Bill 3962 A), supported by a broad coalition of local government and public safety stakeholders, cleared a critical policy committee vote, advanced out of the House, but then stalled in the Senate without a floor vote due to session running out of time.
Although the outcome was disappointing, the near miss has only galvanized counties and cities to get the bill across the finish line in the 2026 short session. An effort to reform the local TLT has the potential to be one of the most consequential legislative efforts of the session for local governments in the 2026 legislative session. Passage of this legislation will mark a victory for local control, public safety investment, infrastructure resilience, and fairness for residents that remain after tourists leave their communities.
Two versions of the local TLT reform bill will be introduced: Senate Bill 1562 sponsored by Senators Weber and Neron Misslin and House Bill 4148 sponsored by Representatives Walters and Javadi. These bills are identical in language and exist primarily to offer local governments two paths to attempt to pass the bill in 2026.
2003 Rules Governing 2026 Realities
Current law ties the hands of local governments by locking in revenue ratios from post-2003 local TLT increases to a 70/30 split, with 70% of revenues statutorily required to be spent on very specific infrastructure and services that support tourism, and 30% of revenues directed toward general fund discretionary spending. While this ratio worked for the 2000s and early 2010s, these ratios no longer reflect how tourism impacts communities and local governments.
For many counties, peak tourism seasons mean populations that double, triple, or even quadruple overnight. That surge places real and measurable strain on sheriff patrols, jail capacity, search and rescue operations, EMS response times, roads and bridges, sanitation systems, and outdoor recreation infrastructure. Those costs do not disappear when visitors leave; they are borne year-round by the residents and local governments who maintain these systems.
The reintroduced bills in 2026 would not eliminate tourism promotion funding. Instead, it would allow local governments to adjust post-2003 TLT distributions so that up to 60% may be designated as general fund dollars to be used for critical local services and infrastructure, while maintaining a dedicated 40% for tourism promotion and facilities.
Why This Matters to Every County — Not Just “Tourism Counties”
It is tempting to assume that this debate primarily affects coastal or other destination communities. However, that assumption is outdated.
Tourism patterns have shifted dramatically. Short-term rentals are increasingly located outside traditional tourism cores, spreading wear and tear across county road systems, rural water districts, and unincorporated areas. At the same time, counties face mounting infrastructure backlogs, like transportation and water infrastructure needs, without meaningful growth in flexible revenue options.
Importantly, the local TLT is one of the only tools counties have to capture visitor-generated costs without shifting the burden onto permanent residents through new property taxes, levies, or bonds. Gas taxes are declining in real value, are distributed on a per-capita basis rather than road usage, and do not reflect tourism impacts. Income taxes flow to state priorities that may not align with local needs. In short, counties are being asked to absorb visitor impacts with tools designed for a very different era.
2026 Will Be a Turning Point for Local TLT Reform
The 2025 session demonstrated that this reform is viable. It moved. It gained traction. And it came within a single chamber of becoming law. What will make the difference in getting the bill passed in 2026 is that local governments are better prepared, have had more time to meet with legislators, and intend to move quickly on the bill to avoid it being left on the table at the eleventh hour of session.
If you are interested in supporting this effort in 2026, please contact Justin Low to coordinate the following opportunities:
- Providing public or written testimony in support of the bill
- Traveling to Salem to meet directly with legislators
- Drafting an op-ed for publication in your local newspaper to elevate the county perspective
County voices were essential to getting local TLT reform as far as it went in 2025, and they will be decisive in getting it across the finish line in 2026.
Contributed by Justin Low | Legislative Affairs Manager