Selectmen Nix Room Occupation Tax Increase Article

By: William F. Galvin

Harwich News.

HARWICH — The board of selectmen voted Monday night to remove an article seeking an increase in the local room occupancy tax from 4 to 6 percent from the May annual town meeting warrant.

Town Administrator Christopher Clark told selectmen Monday night he was presenting a balanced budget to the finance committee, unless selectmen decided to make additional adjustments that evening. The budget presented by Clark included $350,000 in revenues that were anticipated to come from an increase in the room tax.

Selectman Larry Ballantine said he was uncomfortable with the use of the $350,000 that would be generated from the increase in the room tax because it might not be passed in town meeting.

“You can't base a budget on iffy revenues,” Ballantine said. “Basing it on that assumption is highly risky. I'd like to see it based on 4 percent.”

“I agree 100 percent,” Selectman Michael MacAskill said. “I'd like to see the $350,000 taken out.”
Selectmen made clear their concern for repeated increases in budgets on both the town and Monomoy Regional School District side over the past few years, out-distancing the municipality's ability to pay. They pointed out while they have not seen the final MRSD budget, a 4.47 percent increase is expected.

Selectman Donald Howell said he would like to see the $350,000 reduction split, with $175,000 coming from the school district and $175,000 on the town side. But the board took no final vote to do so. MacAskill said he wanted to see the town side reduced by $350,000. He pointed out town meeting has turned aside the room tax increase to 6 percent on two occasions.

MacAskill cited a 7.7 percent increase in the budget, up from $65 million in FY19 to $70 million in FY20. Clark said the $5 million increase is driven primarily by debt exclusions and school increases, including $910,000 for the town's share of the Cape Tech new school project; $1,150,000 in student population increase assessment for the Monomoy; and another $1,050,000 in town-based debt exclusions.

“I can't legally ignore a debt exclusion vote,” Clark said of spending increases approved by voters. He also cited additional collective bargaining agreements to bring fire department personnel in line with mid-range wages from other Cape departments.

“I'm not supporting the budget at all,” MacAskill told Clark. “I have a lot of questions.”

Clark said if the board does not want him to include the $350,000 in the budget, he would make adjustments. He pointed out financial benefits from the short-term rental tax that will take effect on July 1 on Airbnbs and private homes cannot be calculated for this budget cycle. Representatives from the state department of revenue have made that clear they will not allow inclusion of that revenue before there is a track record, he said.

Selectmen were supposed to turn the budget over to the finance committee for its recommendations Feb. 25.

“We've only had a preliminary shot at the budget,” MacAskill said.

Ballantine agreed they need the budget information earlier; the last minute doesn't work. Howell said he doesn't want to roll in a bunch of budget motions at town meeting because voters do not vote something they do not understand. He said they just got to talk to department heads last Saturday, after the Feb. 25 deadline.

“It's like shooting darts blindfolded,” Howell said.

“This is a charter discussion more than a budget discussion,” Clark said of timing issues. “If you want more time something more has to be built into the schedule.”

“You just can't push the time out,” Howell responded, calling the warrant publishing date a brick wall.

Wrestling with the increase in budget, selectmen also agreed they need to better educate voters about the impacts of debt exclusions.

The board then took on the issue of putting the increase in room occupation tax before voters in the May town meeting. Ballantine said consumers pay for the increase, but part of such increases fall back to the lodging owners.

“I'd argue the fee is a localized tax and we have to be careful,” Ballantine said. “I'd vote against it.”

MacAskill and Howell both cited the absence of public input and comments on a proposed increase. MacAskill said they should first have a plan on how they would use such additional revenues.

Cyndi Williams, executive director of the chamber of commerce, said local hotels, B&Bs and lodging owners are against a 50 percent increase. She said there are 14 forms of accommodations in town with a total of 347 rooms, and most are family owned and operated. She said they are trying to stay afloat, and adding 2 percent here and an additional 2.75 percent under the short-term rental tax, would have a major impact. She said it will also create additional competition from lodging facilities in surrounding towns.

The board voted 3-1 to remove the article calling for the increase from the warrant. Selectman Ed McManus dissented.

Given the directive to reduce the budget by $350,000, Clark said on Tuesday, “I'm going to try to avoid layoffs. New positions, such as an assistant IT position is a means to try to do it. But it's not enough to offset the $350,000.”