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No Break for Local Businesses (Reposted)
The City of Encinitas voted earlier this year to seek an expansion of the tourist tax (TOT). Last night the council chose the details of the ballot measure. I addressed the council and said something close to:
Recognizing the council is already committed to placing a TOT amendment on the ballot, we ask the council to consider the following alternative.
We ask that when you rewrite the general fund TOT ordinance to cover short-term rentals that you consider using the new revenue to offset a DECREASE in the TOT rate, FOR EVERYONE.
Please consider taking the general fund TOT down to 6% [from 8%]. This wouldn’t result in a net loss of tourism revenues, because more people will be paying the tax.
This ballot measure provides an opportunity to improve the profitability of local businesses and the desirability of Encinitas as a tourist destination.
Including a rate reduction on the ballot will make the measure more palatable to local businesses and it would stand as a testament to the council's true beliefs about the city budget.
I do see a possible reason for rejecting the option we are putting forward for consideration. If this ballot measure is proposed because you think our tourism industry can be tapped to make up for a stretched city budget then a revenue neutral approach isn’t going to work for you. If this measure is about growing the size of the city budget or making up for overspending beyond your long-term means, you should tell the public.
If the measure is about deciding if it is fair for short-term rentals to share the burden, then send that unambiguous message to the voters, make our hotels more competitive, and reduce the sting on short-term rentals by lowering the TOT rate.
This alternative may or may not be a good policy, and we think now is the right time to make that determination.
The council did not consider a reduction and they did not justify the necessity of growing the city's budget. The measure was approved 5-0.
Neither the ETA board or the membership have taken a position on Prop F or Prop G amendment. My address to the council reflected the hope of ETA officers to see the council deliberate over a potential improvement in the measures.