Citing the impact of COVID-19 on city finances, San Mateo officials want to place a hotel tax hike on the November ballot — but a representative of that industry said any rate increases should wait until the crisis is over.
During a meeting Monday, the City Council unanimously agreed to begin polling residents on increasing the hotel tax, officially known as transient occupancy tax, from 12% to 14%. The effort was already slated for this year, but at least one councilmember felt it’s even more necessary given current circumstances.
“I feel like now is a good time to pursue it,” said Councilman Rick Bonilla, and referenced the estimated $7 million structural deficit the city is facing because of the ongoing health crisis. “I think we’d be irresponsible if we didn’t move forward trying to find some way to close that gap.”
John Hutar, president and CEO of the San Mateo County/Silicon Valley Convention and Visitors Bureau, acknowledged the city’s need for additional revenue in light of the crisis, but noted hotels are also struggling. Currently, 21% of hotels in the county are closed because of COVID-19, he said, noting that the shelter-in-place order has also been extended for an additional month.
Hutar feels any hotel tax increases should wait until the industry is back on its feet.
“My recommendation would be to put it off at least until tourism returns to some sense of normality and that would be a win for everyone,” Hutar said. “If they put this off to 2023 or 2024 that gives the industry time to recover. But if they step on the accelerator now that’s maybe not the best decision.”
Hutar also noted many cities take a phased approach to increasing hotel tax, which would offer additional time for the industry to adapt even if the proposal were to move forward in November.
Hutar added the proposed 14% hotel tax rate is relatively high, noting most cities in the county currently charge 12%.
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“Any tax increase can put a destination at a competitive disadvantage,” he said.
City Manager Drew Corbett said a consultant with the city is confident that COVID-19 will not have a significant impact on support for a hotel tax hike.
“[The consultant] has colleagues in the field that have indicated that they’re continuing to move forward with their polling and they’re not seeing skewed results you might expect to see during this time,” he said. “We don’t feel like we’ll get bad results or different results as a function of the current environment.”
In other business, the council in June will discuss a proposed safe storage of guns ordinance as well as proposed bans on e-cigarettes and vaping, Corbett said, adding that the ordinances will be modeled on ones passed by the county and neighboring cities.
Discussion about updating the city’s infrastructure master plans and traffic action plans have been pushed out to after the COVID-19 crisis is over. An electronic billboards project, aimed at providing a new revenue source for the city, has also been put on hold until after the COVID-19 crisis, Corbett said.
Here come the tax em to death Democrats. Right on que, Mr. Bonilla is looking to tax his way out of structural deficit only partly caused by the Coronavirus. He is just one of many politicians that will not look to cut city services or payroll, but tax it's citizenry to fund their priorities. Sorry Mr. Bonilla, it's time the city of San Mateo takes a haircut and stops trying to be everything to everybody. Who even talks about new taxes at a time like this, Democrats.
Yea, Mr. Bonilla looks like a tax and spend person. Not sure how the new non-elected counsel member will vote. But the three majority counsel members I believe are more fiscal responsible. See what happens or may not have a choice cutting costs. The biggest part of the budget is public safety. FD already merged, now the PD.
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Here come the tax em to death Democrats. Right on que, Mr. Bonilla is looking to tax his way out of structural deficit only partly caused by the Coronavirus. He is just one of many politicians that will not look to cut city services or payroll, but tax it's citizenry to fund their priorities. Sorry Mr. Bonilla, it's time the city of San Mateo takes a haircut and stops trying to be everything to everybody. Who even talks about new taxes at a time like this, Democrats.
If you are considering raising hotel tax, why are the Air B & B folks not being taxed. They are hotels...
AirBNB folks have to pay this too. I don't think this is a good time to raise this when AirBnbs and hotels are also having financial issues!
Just to be clear: going from 12% to 14% is a 16% increase.
Yea, Mr. Bonilla looks like a tax and spend person. Not sure how the new non-elected counsel member will vote. But the three majority counsel members I believe are more fiscal responsible. See what happens or may not have a choice cutting costs. The biggest part of the budget is public safety. FD already merged, now the PD.
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Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't threaten. Threats of harming another person will not be tolerated.
Be truthful. Don't knowingly lie about anyone or anything.
Be proactive. Use the 'Report' link on each comment to let us know of abusive posts.
PLEASE TURN OFF YOUR CAPS LOCK.
Anyone violating these rules will be issued a warning. After the warning, comment privileges can be revoked.