Sonoma County supervisors consider hike in hotel-bed tax along with other tax increases

A year ago, Sonoma County voters soundly rejected a proposed sales tax increase sought by county officials to help fix roads.

Now, amid a steady economic rebound, county supervisors are again eyeing several proposed tax hikes to support a broad range of core services and other high-profile initiatives.

On Tuesday, three members of the Board of Supervisors voiced strong support for increasing taxes on overnight stays at hotels, inns, vacation rentals and campgrounds outside city limits as a way to raise money for services including affordable housing development, road repair and public safety departments.

Supervisors are considering a ballot proposal that could go to voters this November that would increase the bed tax paid by thousands of lodging outlets from 9 percent to 12 percent, a boost that would generate an additional $4.8 million a year for the county in tax revenue.

The idea has generated concern among taxpayer advocates and the county’s lodging industry, whose representatives say lodging businesses could be forced to pay additional taxes to support services unrelated to tourism.

But board Chairman Efren Carrillo, arguing in favor of the tax measure, said visitors to Sonoma County have a large impact on the county’s roads and emergency services, and that a booming local economy fueled by tourism has strained the county’s housing market.

“Tourism has been really important to Sonoma County,” Carrillo said. “On one hand, it helped sustain us during the economic recession. But there are some components of tourism that do create some unintended consequences. … We should be responsive to those community impacts.”

In his call for the tax hike, Carrillo was joined by Supervisors James Gore and Susan Gorin. Together, the trio represent areas with a majority of the county-governed lodging businesses, including the coast and Russian River Valley, north county and Sonoma Valley.

The tax proposal surfaced in the second day of the county’s annual budget hearings, with supervisors set to weigh in on other potential tax measures this week, including a sales tax to expand preschool to every 3- and 4-year-old in the county, and another to support improvement and maintenance of open space for county parkland.

Revenue from hotel bed taxes, also known as transient occupancy taxes, primarily supports advertising of tourism-related businesses and promotion of the county as a destination for visitors. Revenue from such taxes grew 7.6 percent this fiscal year, for a total of $13.7 million, and is expected to continue to climb, according to county officials.

Under an initial proposal outlined Tuesday, three-quarters of the money generated from a tax hike - $3.6 million per year - could supplement funding for such services as road repairs, development of affordable housing and public safety services. The remaining $1.2 million would go to the county general fund and could be used for any purpose.

The proposal calls for a general tax measure, according to County Counsel Bruce Goldstein. That means it would need only a simple majority to pass and that the board, despite any stated commitments, would not be legally bound to spend the funding on its stated purposes.

Supervisors Shirlee Zane and David Rabbitt were not opposed to the tax increase, but Zane voiced reservations about the county’s ability to gain voters’ approval of a general tax not tied to specific programs.

“People are often suspicious of a general tax,” Zane said.

Rabbitt expressed concerns about the general-tax approach, how the money would be spent and the potential impact on the county’s tourism industry, though he said he’d support raising hotel bed taxes to offset the impacts of tourism. Most California cities impose a tax on visitors who use overnight lodging. In Sonoma County, Santa Rosa and the county have the lowest hotel bed tax rate, at 9 percent. Healdsburg, Rohnert Park and Windsor have the highest rate, at 12 percent. Cloverdale, Sebastopol, Sonoma, Cotati and Petaluma have a rate of 10 percent.

The board stopped short of advancing the measure following cautionary comments from former west county supervisor Mike Reilly. He referenced a similar, failed ballot measure put before voters in 2000 to increase transient occupancy taxes for general purposes.

“It’s important to gauge voter sentiment,” Reilly said, urging supervisors to conduct a poll before placing the decision before voters. “It’s expensive to do a ballot initiative, and when we tried it, it failed. There was a very bad response to it.”

Reilly and others also voiced concern over whether a tax increase would stand a chance at the ballot box following the resounding defeat last June of Measure A, the quarter-cent sales tax measure billed by the county as the best way to generate money for long-delayed road repairs. Opponents at the time said it was flawed because it was a general sales tax measure and proceeds would have been deposited into the county general fund and could have been used for any government purpose.

“How is this any different than Measure A?” asked Dan Drummond, executive director of the Sonoma County Taxpayers’ Association, which opposed the measure. “It’s the same issue - it looks like a slush fund for supervisors to spend on anything. There are no assurances that it will be spent on what they say it will, regardless of what they may tell us.”

Lowell Johnson, president of the Sonoma County Lodging Association, a member-supported trade group, said he, too, had concerns about ensuring money would be spent on projects that offset impacts of tourism.

“Our industry is suffering,” Johnson said, citing difficulty that many employers have in recruiting and retaining employees. “People can’t afford to live here as a result of our success and it’s only going to get tougher.”

The Lodging Association has not taken a position on the proposal.

Supervisors are expected to decide this week whether to pursue a poll and to order preparations to place the measure on the November ballot.

On Monday, during its first day of budget hearings, the board boosted the county’s recommended spending plan for 2016-17 by $20 million, to an overall budget of $1.66 billion. The additional allocations include $3 million for a down payment to replace Henry 1, the Sonoma County Sheriff’s Office helicopter. Supervisors also approved $183,000 to increase housing and tenant protection services at Sonoma County Legal Aid, a nonprofit that assists those who believe they are being unlawfully evicted, and $125,000 for Social Advocates for Youth’s Dream Center to expand its shelter services for teens, as well as increase homeless outreach services in Sonoma Valley.

The budget deliberations continue at 4:30 p.m. today and are expected to conclude Thursday.

You can reach Staff Writer Angela Hart at 526-8503 or angela.hart@pressdemocrat.com. On Twitter ?@ahartreports.