“Groups divided on meals tax hike”

Posted: 21 Jul 2010 01:07 AM PDT

July 21, 2010

Groups divided on meals tax hike

By Katie Farrell Lovett Staff writer

NEWBURYPORT — Debate was split last night when a City Council subcommittee reviewed two measures that would increase the city's hotels and meals tax. Business owners urged them to vote it down, while others said a portion of the raised revenue should be used to promote the city.

About 10 people attended the public hearing of the City Council's Budget and Finance Committee — many urging the councilors that, if they do implement the local option, to designate a portion of the money to go toward marketing Newburyport to tourists and promoting the city as a destination. Others wondered if their input mattered or if the councilors already had made up their minds.

The two separate measures were first brought to the City Council last October. They were not acted on by the time that council session ended, and so they were resubmitted for this new term.

If approved, they would allow Newburyport to implement a meals tax that would climb from its current 6.25 percent to 7 percent and would increase the city's local room occupancy excise from 4 percent to 6 percent. It would add 75 cents to the cost of a $100 restaurant tab, and $3 to the cost of a $150 hotel room.

The added amounts would be kept by the city and go back into the community. Ward 4 Councilor Ed Cameron, the sponsor of the bills, said the estimated revenue from the meals tax option is about $280,000, and the hotel tax would bring in an additional $30,000. In many communities, the actual revenue raised has been higher than estimates, he said.

Since the state allowed communities to impose the optional tax, 110 cities and towns have adopted it.

Greater Newburyport Chamber of Commerce and Industry president Ann Ormond told the committee that the restaurant owners are opposed to the increase but could not attend the hearing as it was scheduled during their peak time — a summer night.

With the impending paid parking plan going into effect soon and talk of increasing the meals tax, there is a perception of a "little anti-tourism feeling," Ormond said.

She encouraged the council, if they do adopt the increase, to follow the model of other cities, such as Salem, and develop a marketing campaign promoting Newburyport, using the funds from the additional dollars.

Karen Battles, co-founder of the Around Newburyport tourism group, said the funds could create a "sizeable" marketing campaign to promote the city year-round, marketing events such as the Eagle Festival or bird-watching, while marketing to Boston and other areas. The city is full of historic and cultural resources that are not being marketed effectively, she said.

Linda Garcia, owner of Abraham's Bagels and, as she told the group last night, now a co-owner of Haley's Ice Cream, said customers don't understand the rise in the meals tax.

"They think we just raised our prices," she said.

Lori Guertin, owner of the Essex Street Inn, said she had been waiting for such a meeting.

"I'm not in favor of it; I think it's just going to happen anyway," she said.

She questioned how the inns were to explain the increase, saying the move will draw flack and backlash.

How much of the proceeds is gong to be used for promoting the city and to by the Chamber of Commerce to draw in tourists, she wondered.

"An increase is going to be difficult to put through to our guests," she said.

Donna Greco, owner of Starboard Galley, called the initiative "a two-edged sword."

A lot of the restaurant's business comes from year-round residents, she said, many of the old-time Newburyporters, and they feel the increase is "penalizing them."

"They're not going to come if they have to pay extra," she said.

The restaurant saw a drop-off when the meals tax climbed to 6.25 percent before it leveled off, she said. The restaurant pays water, sewer and real estate taxes, she said, while supporting festivals like Yankee Homecoming and belonging to the Chamber of Commerce.

"We pay our fair share," Greco said.

The city is targeting the meals and lodging portion of the community as opposed to other segments, "because you can," Greco added.

"The state has given you the right to come to us," she said.

Joy McFarland, manager of the Garrison Inn, said the inn is already not filling up with guests except for the summer months. Their guests traveling to the city for business are price-conscious and will go to another town, she said.

"It's going to be a very hard sell getting them to book," she said. "It's already hard."

George Roaf, 78 Bromfield St., said he was in favor of the local option. Restaurants he travels to outside of the city are all a higher tax, he said.

The profit raised from the increase should go back into the schools for a foreign language program, he added.

"We need it badly," he said.

James Shanley, 15 Olive St., said the funds could also go back into the downtown, such as for the downtown street lamps that are dim or for creating year-round bathrooms.

Ward 5 Councilor Brian Derrivan questioned when "enough is enough."

"Where the hell do we draw the line with nickel-and-diming everyone to death?" he said. "Where does it end?"

Ward 3 Councilor Bob Cronin said the city keeps forgetting about their "hidden population" — the boaters who arrive each weekend. Many of them will go downtown to buy a meal. They also are paying the city for excise tax and other fees, he said.

"They are spending money all the time," he said.

Boats draw tourists, who come to the city to see them on the water and then spend their day here spending money as well.

The committee agreed last night to schedule another hearing in the coming weeks, saying they were not ready to make a recommendation to the full City Council.

If the City Council votes to adopt the increases before Aug. 1, they would not go into effect until Oct. 1.

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