Motel/hotel tax dropped back to 7%
The two percent increase, from seven to nine percent, was approved by the city a year ago, but that rate hike sunsets on June 30 and the city will let it die, for nowIt will cost the city about $30,000, but the city council has decided not to renew last year's increase in the local transient room tax.
A year ago, the council voted to increase the local room tax two percent, from seven to nine percent. The increase would be used, it was decided at that time, to pay for two full-time Emergency Medical Technicians.
Beth James, owner of the City Center Motel, joined with a number of other local motel operators to speak out against keeping the tax at the higher rate. She said when the increase was put in place last year, it was too late, she had already advertised her rates using the seven percent rate. "It cost me $1,960 for the next six months. I expected the increase to sunset and did not advertise the increase. If you retain the nine percent," she told the council, "again, I'll have to eat nearly $2,000."
Dusty Flegel explained that he had taken over the Rustler's Roost Motel and he's seen the occupancy rate go down considerably this past year. "I was told it would drop back to seven percent and I believe the city should live up to that commitment."
Council member Jerry Blank pointed out that City Manager and budget officer Henry Hartley had begun working on the city's budget early in the year. Why, Blank asked, did Hartley wait until the last minute to bring up the transient room tax?
"There is a good reason," Hartley said, "I didn't think of the sunset clause until the work on the budget was completed." Dropping the tax back to seven percent would cost the city's general fund about $30,000, he added. "That will not make or break the city."
Hartley said his job was to work out ways to bring in revenues so the city can do its job; provide services to the city Of Prineville. Hartley had argued that keeping the city's motel/hotel room tax high was in line with neighboring
communities. However, research turned up the facts that although three of the four were investigating a transient room tax increase, none were presently at the nine percent level. Bend has a seven percent tax rate and is looking at a proposal to raise that to 10 percent. Madras' rate is presently six percent, but community leaders there are looking at jumping to nine percent. Sister, at eight percent has a proposal to go to 10 percent, but that has not been done yet. Redmond's rate, 7.5 percent, is apparently the only one not facing a possible adjustment.
Prineville council member Dorless Reid suggested that the local transient room tax be dropped to eight percent rather than let the sunset clause simply return it to seven percent. That motion died for lack of a second. No other action was taken by the council, so the current room tax will sunset and revert back to seven percent.