A hard-fought legislative victory for Arlington has been vetoed by Virginia Gov. Bob McDonnell (R).

McDonnell has vetoed two bills that would have allowed Arlington County to levy a 0.25 percent hotel tax surcharge. The Transient Occupancy Tax (TOT) surcharge would have helped fund the county’s tourism promotion efforts, and was actually lobbied for by the Hotel General Managers’ Committee of the Arlington Chamber of Commerce.

Del. Bob Brink (D-Arlington), the sponsor of the House bill (HB 2303) that passed last month, says the governor called him on Monday night to tell him that he was planning to veto the bill. Gov. McDonnell said he was vetoing Arlington’s TOT bill, and a similar bill for the City of Fairfax, because he was concerned about Northern Virginia hotels being “placed in a competitive disadvantage in comparison with D.C. and Maryland,” according to Brink.

The local hotel tax surcharge increase bills came at the same time as a legislated increase in the regional TOT in Northern Virginia, as part of the state’s sweeping transportation funding package. McDonnell also reduced the Northern Virginia TOT increase from 3 percent to 2 percent on Tuesday.

(Other amendments to the transportation package made by McDonnell include a slight reduction in the proposed vehicle titling tax — from 4.3 to 4.15 percent — a reduction in the new annual fee paid by owners of hybrid and alternative fuel vehicles — from $100 to $64 — and the reduction of a regional congestion fee.)

In a statement, Brink said that McDonnell’s veto of his bill will hurt, not help local hotels.

I’m disappointed that the Governor has taken this action and that the Arlington bill got caught up in the larger politics of the transportation bill. The concern that the Governor expressed to me — our hospitality sector’s competitive position in relation to neighboring jurisdictions — is the precise reason that Arlington’s hospitality industry sought this legislation. In the uncertain economic climate of the DC region, Arlington’s hotels need all the tools available to compete for tourism and business travel. HB 2303 would have given them one powerful additional tool, and I regret that our business community won’t have it at its disposal.

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