TOT increase on the ballot as Measure L

Of the several tax measures appearing on the November ballot, locals can take comfort in the fact that one of them – Measure L, which increases the Transient Occupancy Tax (TOT) from 9 percent to 12 percent – doesn’t take a dime out of local pockets. But that doesn’t mean the measure doesn’t have opposition.

The TOT is a tax that only visitors pay, whether they stay as guests in hotels, motels, bed and breakfasts, even campgrounds and vacation rentals, at any licensed establishment in Sonoma County. The tax is added to a visitor’s lodging bill. Measure L seeks to increase the TOT for the first time since 1992, a 3 percent bump that is estimated to generate about $4.8 million in additional revenue per year.

“This tax is one of the most direct ways for our County to collect revenue from visitors, which helps address the impacts of tourism,” reads the argument in favor of Measure L, which is signed by Supervisor David Rabbitt and several others, including Jack Buckhorn, executive director of the North Bay Labor Council.

By standing policy, in place since 1986, three-quarters of the revenue generated from TOT goes to help promote county tourism and economic development by helping support promotional, community and cultural activities. The recipients include local Chambers of Commerce, visitor centers, local and county-wide events and cultural and artistic organizations – which in Sonoma Valley include the Transcendence Theatre and the Sonoma International Film Festival, among others.

But 25 percent is directed to the county general fund, where it is available for emergency services, workforce housing development, code enforcement, and road repairs and improvements.

“We know that Sonoma County is a desirable place to visit, and we use a great deal of the money to promote Sonoma County as a tourism destination,” said Supervisor Gorin. “But we also know that tourism in general produces impacts on the community and the county at large.” She cited the costs to the county for emergency, public safety and other services for tourists that the county must bear, and the only way to have tourists pay for those services is through a TOT or similar.

But opponents of the measure, which include Timothy Hannan, president of the Sonoma County Taxpayers Association, characterize Measure L as a tax increase, even though it doesn’t affect local residents. “How much more of a financial strain can the County put on tourists before they begin to say, ‘Let’s go somewhere else’?” asks Hanna. “Let’s not find out.”

Hannan’s organization states that “the biggest budgetary problem facing the supervisors is the County pension problem.” Since an increase of tax revenue would go to the general fund, “meaning the revenue could be used for anything the supervisors want,” adding more tax income only serves to “reduce the needed sense of urgency” that the supervisors need to apply to fixing the pension obligation.

The two Board of Supervisors meetings in July to consider the TOT increase drew little public comment, and no opposition. The only questions raised were what would happen to the revenue generated by the additional 3 percent – if it too would be subjected to the 75/25 split, or if there were some way to focus it more directly on workforce housing and other areas of current concern.

And Craig Harrison of Save Our Sonoma Roads issued an endorsement that read, “We urge voters to support the tax increase and to tell the supervisors that much of the TOT revenue should be devoted to fixing county roads.”

Though she told the Index-Tribune that, “This funding may be difficult to reallocate since a number of departments, chambers, and visitors centers depend on this continued funding to meet their budgets each year, ” Supervisor Gorin wouldn’t close the door on re-evaluating the current division of revenue from TOT.

“The Board has not discussed the appropriate split for the new 3 percent TOT. It might be assumed that this funding would be split in a similar way to this board policy … but this is a conversation we will have if and when the TOT increase is approved by the voters in November. It is my intent to look at the revenue broadly and differently from the above board policy. But I am just one supervisor.”

The existing TOT brought in $12.8 million in Fiscal Year 2014-15 and $13.9 million in FY 15-16; without the increase, the income from the 2016-17 TOT could total about $15 million. With the additional 3 percent, that income would increase to about $18.75 million, if current projections hold.

Though the FAQ the county is distributing about Measure L says that “25 percent of TOT revenue goes to the county general fund for projects like road repairs” – with the last two words emphasized – opponents are skeptical. “That means the supervisors can promise one thing but do another,” wrote Hannan in his rebuttal to the county’s arguments in favor. This is essentially the same argument the Taxpayers Association used to oppose Measure A, the 2014 initiative to increase sales tax by a quarter cent. That measure failed to get a majority.

Supporters argue that increasing the TOT, which has not changed since 1992, would put Sonoma County in line with neighboring counties. Like most other counties, Sonoma also has an additional percentage tacked on specifically to market overnight stays in the Business Improvement Area, since 2004 a 2 percent BIA fee. This would bring Sonoma County’s total to 14 percent – and Napa County’s TOT plus similar fees totals 14 percent, and San Francisco’s is 15.5 percent, while Marin County’s total is 12 percent.

Essentially, this means an overnight stay in a $100/night Sonoma County room (if you can find one) ends up costing $111 currently, and it could go up to $114 – plus sales tax. That is currently at least 6.5 percent in the county though higher in the cities, so that $100 room ends up costing visitors at least $121.

The county TOT and BIA apply only to lodgings outside of any city limits, though all of Sonoma’s nine cities have their own TOT that replaces the county TOT and is used for similar purposes. The City of Sonoma’s TOT is 10 percent with a 2 percent over-ride which goes directly to the Tourism Improvement District; Healdsburg’s is 12 percent plus a 2 percent city promotion assessment, and Santa Rosa’s is 9 percent plus 2 percent for the county Business Improvement Area and an additional 3 percent for the city BIA.

Supporters of Measure L emphasize the benefits that the tax brings to the county. “We enjoy the luxury of living in a world class destination,” reads the argument in favor. “Let’s ensure that distinction is protected by asking visitors to pay their share. Measure L keeps our tourism industry competitive while addressing its impacts.”

And, not to be overlooked, the key argument that proponents offer: “Measure L will not raise taxes for residents.”

Opponents however say that passing any tax measure “would head the supervisors away from fiscal responsibility, which would be the wrong direction.”

Whatever direction the county TOT goes depends on the vote of the public Tuesday, Nov. 8.

Contact Christian at christian.kallen@sonomanews.com.