Sunday, October 11, 2009

Investing in Our Community and Decreasing Our Overreliance on Property Tax

One of the arguments I'm hearing against the LOCAL meals tax of .75% is that Newburyport residents eat at local restaurants.

I never said Newburyport residents don't eat downtown. What I did say on my blog:
"Much of the cost of the proposed meals tax will be paid by non-residents and virtually the entire hotel tax will be paid by non-residents. Because these excise taxes are small in nature – a $100 restaurant bill will be increased by 75 cents and a $200 B&B overnight will be increased $4 -- these incremental changes are not likely to have an impact on attracting tourists and diners to Newburyport."

So as you can see, I said that 'MUCH' of the cost would be covered by non-residents: I didn't say "most" and I didn't say "all".

I know Newburyport people go out to eat--I'm one of them. In the last month, we've been to many of them: Michaels (couple of times), Black Cow, Park Lunch (couple of times), Angie's, Upper Crust, Famous Pizza, Mission Oak Grill (hey, it was our anniversary).

I estimate that annually in Newburyport $37,000,000 (yes, that's $37 Million) is spent on restaurant meals. In Amesbury, roughly the same size in population as Newburyport, restaurants do about $13 Million in business. You could argue perhaps that people in Newburyport like to go out to eat more or have the ability to go out to eat more. I would argue that tourism explains a significant part of the difference.

Last night in the Grog parking lot, there were license plates from NH (3x) and New York, the rest Massachusetts. I was tempted to hector the New Yorkers about the Yankees but I kept quiet. Hopefully, the New Hampshire people will continue to come back if we raise the meals tax by .75% which would still be less than the New Hampshire meals tax of 9%.

I'm proposing a .75% tax to be kept LOCALLY. Not 75%, not 7.5%.

The state meals tax went up on August 1 by 1.25% to 6.25%. None of that 1.25% increase nor the original 5% goes directly to the community in which it was raised. In fact, 1% goes directly to the MBTA as it has for many years.

True, some of the current State meals tax (and sales tax and income tax) comes back indirectly to Newburyport but it's in arcane local aid and education funding formulas.

The data I'm relying on is from http://www.mass.gov/Ador/docs/dls/mdmstuf/LocalOptions/MealsandRooms.xls That data assumes implementation from October 2009-June 2010 as 32 communities have done.

This local option is a way to diversify our overreliance on property tax as a way to fund local services.

When your average tourist (and I'm pro-tourist by the way) visits Newburyport their dollars support our local businesses and restaurants. Visitors enjoy our historic and natural environment. They leave nothing behind to fix our sidewalks, support our schools, or lower our property taxes.

I think the money from a slight increase in a local meals tax ought to be targeted on a few specific local benefits. What if the money could encourage more people to downtown, what if sidewalks could be improved, what if our parks could be improved, what if we could increase the elderly exemption for senior homeowners? What if we put the money into a capital improvement fund for needed infrastructure repair? The needs are great and the local resources at our disposal are stretched thin.

This is hardly a radical notion that will kill Newburyport restaurants-- it's a rational move taken by Boston, Brookline, Somerville, Cambridge and many other smaller communities and it's even higher in New Hampshire and Maine.

I spoke to a restaurant owner last week who said that an increase in the amount I'm proposing would not impact business.

I wanted to raise these issues now so that they can be discussed prior to the election. I'd encourage you all to contact your City Councilors or attend the City Council meeting and make your opinions known.

3 comments:

Ari Herzog said...

I have several thoughts, Ed, so here's one:

How do you know the license plates in the Grog parking lot are from people who live in those states?

There are colleges in Massachusetts, you realize; and it's very possible that the New York plates are from students who attend UMass Lowell and the NH plates could even be Newburyport residents.

Just saying.

Ed Cameron said...

Ari,

You saved yourself with "Just saying."

Yes, I do realize there are colleges here;-).

And I also realize that a MA plate doesn't mean they live in Newburyport.

When my ordinance for mandatory tatooing on the forehead of each tourist in Newburyport passes the Council, it will be easier to discern local vs. out-of-towner.

Anonymous said...

is it true that they kick you out of the democratic party if you don't attempt to raise taxes for you constituents?

just saying...