GAO
Government Accountability Office
New Mexico Office of the State Auditor

Transparency Report
Lodgers’ Tax Expenditures
Lodgers’ Tax Provides Revenue to Develop the
Tourism Industry
Local governments in New Mexico have the option of imposing a
lodgers’ tax on rentals of motel and hotel rooms, trailer camps and
several other rental settings. Municipalities and counties have two
years to expend collected revenues and typically expend carryover
funds in each annual budget.
Revenue. Every vendor providing lodging within the county or
municipality that imposes a lodgers’ tax is responsible for collecting
that tax. If the county or municipality collects more than $250,000 in
lodgers’ tax revenue, the governing body must conduct random
audits of vendors to confirm compliance.
Expenditures. Currently, the law provides that, for Class A counties
or municipalities with a lodgers’ tax greater than two percent, 50
percent must be used to advertise, publicize and promote touristrelated attractions, facilities and events. The remaining 50 percent
of revenues may be used for collecting and administering the tax;
for tourist-related facilities, attractions or transportation systems; or
for financing capital items associated with tourist-related facilities,
attractions or transportation systems. If the tax is two percent or
less, one-fourth of the revenue must be used to advertise, publicize
and promote tourist-related attractions, facilities and events.

In determining whether an expenditure is an appropriate use
of lodgers’ tax revenues, local governments reported that
they consider:
• Will the event or use of funds bring people from out of town?
• Will the out-of-town visitors stay at motels, hotels, motor or
trailers courts or other lodging facilities?
• Will out-of-town visitors be eating at local restaurants?
• Will out-of-town visitors frequent other stores, sites or
attractions in the local area?
The law does not further specify the types of acceptable
expenditures. The law also does not mandate particular disclosures
of expenditures at the county or municipality level. Given the broad
discretion that counties and municipalities have in spending
lodgers’ tax revenue, the expenditure disclosures of the
municipalities that the OSA received for Fiscal Year 2014 in
connection with this Transparency Report appear to be consistent
with the lodgers’ tax Act.

Lodgers’ Tax
In a nutshell
   
Enacted in 1969, the
Lodgers’ Tax Act (Sections
3-38-13 et seq., NMSA 1978)
enables an optional tax,
imposed at the city or county
level, on persons using
commercial
lodging
accommodations. The tax
provides
revenues
to
administer
the
taxing
program and to promote
tourist-related events and
other activities including
advertising for promotion of
events
and
supporting
tourist-related facilities. The
Act requires a five-member
Lodgers’ Tax Advisory Board
appointed by the mayor or
county
commission
chairman.
Learn More
For data on New Mexico lodgers’ tax
receipts visit:
The Bureau of Business and Economic
Research:
https://bber.unm.edu/econ/ltryear.htm
New Mexico Department of Finance &
Administration:
http://nmdfa.state.nm.us/Financial_Distri
bution.aspx

“Financial reporting plays a major role in fulfilling government’s duty to be publicly accountable in a democratic society.”
– Governmental Accounting Standards Board, Concept Statement No. 1. 

 Lodgers’ Tax Expenditures
 

page 2

Case Studies

Summary of Case Study Data

The Office of the State Auditor conducted the
following case studies, examining municipalities
that impose a five percent lodgers’ tax. Some of
these municipalities also impose hospitality fees,
convention center fees, and other items that may
apply to the same transactions as the lodgers’ tax.
Albuquerque: The City of Albuquerque reports that
it uses lodgers’ tax revenues for advertising,
publicizing and promoting certain recreational and
tourist facilities as well as acquisition and
construction of such facilities as provided by law.
The City of Albuquerque’s expenditures of lodgers’
tax revenue were payments for the following:
1.
2.
3.
4.
5.
6.

   
Municipality
FY14
FY14
Audited
Reported
Revenue*
Expenditure
Albuquerque $10,789,915 $10,229,863
Carlsbad
$ 1,867,404 $1,154,266
Gallup
$ 1,253,927 $1,518,467
Hobbs
$ 1,524,140 $1,573,328
Las Cruces $ 1,910,846 $2,244,392
Santa Fe
$ 8,376,475 $8,000,000
Taos
$ 1,034,548 $ 1,119,928
* Revenue does not include rollover from
previous years.

Debt service ($5,115,000)
Albuquerque Convention & Visitors’ Bureau operations ($4,264,000)
Hispano Chamber of Commerce ($581,000)
Indian Pueblo Cultural Center ($30,000)
American Indian Chamber of Commerce ($49,863)
SMG Convention Center management company ($190,000)

Carlsbad: The City of Carlsbad reports that it uses lodgers’ tax revenue to defray costs of advertising,
publicizing, and promoting tourist-related attractions, facilities and events of the municipality or county and
tourist facilities within the area. The City of Carlsbad also uses lodgers’ tax funds for the Chamber of
Commerce’s management of its conference center as well as operations for its performing arts center and
other promotional events. The City of Carlsbad’s largest expenditures of lodgers’ tax revenue were
payments for the following:
1.
2.
3.
4.
5.
6.

Chamber of Commerce general advertising ($303,083)
City facility management ($282,333)
Erosion control at Pecos River Village ($253,434)
Paving at Pecos River Village ($80,875)
Museum exhibit expenses ($46,314)
Nuclear Summit advertising ($40,234)

Gallup: The City of Gallup reports using lodgers’ tax revenues for the purposes of advertising, publicizing
and promoting facilities and tourist attractions, and for acquiring, constructing and maintaining certain
facilities related to tourism. The City of Gallup’s largest expenditures of lodgers’ tax revenue were for the
following:
1.
2.
3.
4.
5.
6.

Debt service ($420,999)
Red Rock Park Event Center operating costs ($259,419)
Chamber of Commerce advertising ($145,000)
National Junior High School Rodeo Finals Rodeo ($119,534)
El Morro addition ($55,333)
Chamber of Commerce Convention Center contract ($50,000)

 Lodgers’ Tax Expenditures
page 3
 
Hobbs: The City of Hobbs reports using lodgers’ tax revenues for advertising; promoting certain recreational
and tourist-related attractions, facilities and events; and acquiring, establishing and operating tourist-related
attractions, facilities or transportation systems. The City of Hobbs’ largest expenditures of lodgers’ tax
revenue were for the following:
1. Payments to the Lea County Economic Development Corporation in connection with airline subsidies for
the Lea County Regional Airport ($500,000)
2. City of Hobbs security in connection with the Hobbs United States Specialty Sports Association League
($228,604)
3. Lea County Fair and Rodeo Board ($150,000)
4. Lea County Event Center ($127,500)
5. Lea County Economic Development Corporation for airline advertising ($106,674)
6. Southwest Symphony ($91,990)

Las Cruces: The City of Las Cruces breaks its lodgers’ tax budget into administration, sales and marketing
expenditures, expenditures for the convention center, and sponsorships. The largest line items in the City
of Las Cruces lodgers’ tax budget were for the following:
1.
2.
3.
4.
5.
6.

Advertising ($580,835)
General administration ($355,327)
Sales and marketing purchased services ($340,684)
Convention Center purchased services ($128,496)
Sales and marketing classified employees ($114,244)
Sales and marketing general travel ($92,493)

Santa Fe: The City of Santa Fe reports that it uses lodgers’ tax revenues for the purpose of advertising,
publicizing and promoting facilities and tourist attractions; acquiring, constructing and maintaining tourist
attractions and recreational facilities; and for all other legally permissible purposes. The City of Santa Fe
also imposes a tax on lodging specifically for the Convention Center at an additional rate of two percent,
with the revenue used to service debt associated with the Convention Center. In contrast, lodgers’ tax
revenue finances the operations of the Convention Center. The City of Santa Fe’s largest expenditures of
lodgers’ tax revenue were for the following:
1.
2.
3.
4.
5.
6.

Debt service for the Convention Center ($2,285,714)
Marketing for the Convention Center ($1,714,286)
Payments to the Convention and Visitors’ Bureau for the Convention Center’s operations ($1,142,857)
Arts Commission ($1,142,857)
Special uses allocations distributed to the Convention and Visitors’ Bureau for marketing ($1,114,286)
Transit, solid waste and police and fire overtime in support of tourism activity ($600,000)

NOTE: The City of Santa Fe’s Fiscal Year 2015 annual financial audit contained a finding indicating the City
overspent its lodgers’ tax fund by $104,024.
Taos: The Town of Taos reports its lodgers’ tax is used for marketing and promotion of Taos, visitor center
operations, chile line transportation operations, and convention center operations. The Town of Taos’ largest
expenditures of lodgers’ tax revenue were for the following:
1.
2.
3.
4.
5.
6.

Payments to Griffin & Associates for advertising and marketing ($369,818)
Visitors’ Center personnel costs ($217,918)
Town’s portion of a public transportation grant match ($208,470)
Visitors’ Center operating costs ($132,316)
Interfund transfer for the Civic Center ($52,041)
Payments to DMC Broadcasting for advertising and marketing ($18,620)