Foster City proposes to raise TOT tax from 8% to 10%

to avoid dipping into the city $17 million reserves, November 2011 ballot

From The Daily Journal, 2/2/11.  Foster City residents will decide in November whether out-of-town guests at the city’s two hotels should be taxed a little more to help trim the city’s ongoing structural deficit, now approaching $5 million. In the meantime, Foster City’s annual Fourth of July celebration will continue with help from the Lion’s Club and the city’s Arts and Wine Festival and Summer Concert Series will continue with the help of some private partnerships. These events add to the character of the city, Mayor Linda Koelling said. “These special events make us a community. It brings us all together,” she said.

Still, the city’s deficit is growing. In November, Finance Director Steve Toler projected the deficit to be about $3.4 million for fiscal year 2011-12 but the city is realizing less in property tax income than it expected. The council voted 3-2 Monday night to put a measure on the ballot asking voters to approve an increase in the transient occupancy tax by 2 percent, from 8 percent to 10 percent.

Foster City currently has the lowest hotel tax in the county. “This is not a tax on Foster City residents,” Koelling said. “It is a revenue generator.” The council did not ask to increase the tax previously, like other cities did, out of concern for the hotels, Koelling said.  “We are way behind the curve here,” she said. Revenue from the tax could generate about $300,000 a year, she said.

The two no votes were councilmen Rick Wykoff and Charlie Bronitsky. Both say more belt-tightening needs to take place before voters are asked to raise a tax. “I’m a fiscal conservative. I don’t like taxes,” Wykoff said. Since guests to the city have no say in the tax, it is not fair to them, he said. “It is basically taxation without representation,” Wykoff said.  Although Bronitsky said the increase to the hotel tax would not be outrageous, he did not support it because he said the city needs to find cost savings elsewhere. “There are areas and places to reduce expenditures that need to be fully explored,” Bronitsky said. “There has not been sufficient belt-tightening.” The mayor is not interested in making any cuts to the fire or police departments. “I’m not willing to chop from fire or police,” Koelling said, adding that shared services has benefited the city. “Sharing the fire chief with San Mateo has saved us money.” The city intends to have a fully balanced budget by the end of FY 2012-13 without dipping into the its reserves, roughly $17 million. 

Posted by Kathy Meeh