State Action Needed
The occupancy tax in North Carolina is a tax on temporary lodging in hotels or other short-term accommodations like vacation rentals, bed and breakfasts, or cabins. (In other states this tax is sometimes referred to as a transient occupancy tax, hotel tax, or lodging tax.) Counties, cities, and towns can have occupancy taxes. The North Carolina General Assembly must first pass a law allowing a local community to set an occupancy tax at a certain rate, and then a local county commission or city council needs to approve the tax at the local level.
Occupancy taxes can be a significant source of revenue for tourist-based economies but are currently mostly limited to funding tourism-related costs. The North Carolina General Assembly adopted guidelines in 1997 saying that from that point on, occupancy taxes could only fund tourism promotion and tourism-related spending. Some cities and counties that already had occupancy taxes in place in 1997 were allowed to keep their local legislation which allows a portion of occupancy tax revenue to be used for other non-tourism public purposes.
For this revenue to be more broadly available for early childhood services, the North Carolina General Assembly would need to need to change its guidelines to allow more local governments to use these funds for purposes unrelated to tourism.