WatchSonoma Watch

Petaluma hotel tax increase proposed


With another couple of thin financial years projected, one Petaluma City Council member thinks it might be time to revisit the idea of increasing the city’s bed tax to raise revenue.

The Petaluma Sheraton (PD File)

During a broader discussion about the city’s current spending plan, Councilwoman Teresa Barrett said a bump in the hotel occupancy tax could help balance future budgets.

“I just want to make another plea that we look at increasing the tax on hotel stays,” she said. “I think this is an ideal way of raising some revenue with very minimal impact in the city.”

She tried to gather support for putting the issue on the ballot next year, although others appeared noncommittal at this stage.

A similar discussion last year died after lodging representatives and other tourist-focused businesses in Petaluma promised opposition to any proposed ballot measure.

They argued that a tax increase would drive away visitors and actually reduce the amount of taxes raised. That, in turn, would mean less money spent at local businesses and could lead to further spending cuts and layoffs in the city, one hotel owner said.

The city currently imposes a 10 percent tax per night on guests at Petaluma’s seven hotels, inns and campgrounds. Another 2 percent is added for a countywide tourism fund.

The city’s portion of the bed tax raises about $1.2 million a year, most of which goes into the city’s general fund while some is returned to local tourism efforts. The city dipped into the tourism promotion fund last year, taking $75,000 to supplement the general fund.

The council considered raising the tax by 2 percentage points last year, which would have brought in another $220,000. The issue died when four council members said they opposed it.

Barrett suggested the timing may be better now, although she didn’t specify the size of the tax increase she would support.

“It doesn’t seem to have gone anywhere in the past, but I really do think the time is here,” she said.

She said she recently attended an event in Napa, where the room tax is 14 percent per night, in addition to a $22 “resort fee.”

“If you’re going, you’re going,” she said.

Recent countywide hotel occupancy rates suggest the industry is rebounding from a two-year slump.

Sonoma County hotel occupancy grew 7 percent in July, with the average room rate up 5 percent from last year, according to a survey by PKF Consulting in San Francisco. Local hotels were 82 percent full in July, compared to 77 percent last year, the survey said.

Leisure and business travel are both growing again following a two-year decline. In turn, hotels are raising rates. The average room rate in Sonoma County was $145.94 in July, compared to $139.40 a year ago, PKF reported.

Barrett’s idea didn’t generate immediate interest from the council, which last week approved a $31.98 million spending plan that balances the city’s budget though next year but is projected to leave deficits two and three years out.

Mayor David Glass said a discussion on raising the tax is worth having, but stopped short of supporting the plan. Councilwoman Tiffany Renee said the council better be prepared for opposition if it presses forward, while Councilman Mike Healy said the objections likely remain the same.

Councilman Mike Harris said an increase would put the city at a competitive disadvantage in attracting overnight guests, an idea echoed by members of the city’s downtown association.

“The lodging coalition are concerned about it because it’s not just the out-of-town traveler, it’s the local businessman, too, that ends up footing that bill,” said downtown association director Marie McCusker.

She said the lodging industry would need assurances that additional funds would be used to encourage tourism if the tax were raised.

“Where does it go? Does it go back into reinvestment, or does it go back to support the general fund and salaries?” she said. “They will have to have the buy-in from the lodging coalition.”

10 Responses to “Petaluma hotel tax increase proposed”

  1. bats555 says:

    Petaluma is a city with a Podunk attitude, are some of the money from this tax going towards street repairs. As I try to avoid driving in Petaluma like the plague. Seems like everytime I drive through this city, I need to get my tires balanced!!!

  2. The Hammer says:

    Seems to me that the “bed tax” is really taxation without representation.

  3. Social Dis-Ease says:

    There we go again, confusing the issue with the perception of good will and common sense.
    These people aren’t on your team.
    Haven’t been for some time.
    They listen to a different coach.
    Gimme an I, gimme a C, gimme an L,
    gimme an E-I…
    what does it spell?

  4. Money Grubber says:

    Why a new tax? Why a higher tax?

    Why not downsize government like every other family and business has had to do?

    Government is not as important as it pretends.

  5. judy delaney says:

    lower the developer fees so there is more congestion and/or empty buildings but hit the tourists so they won’t come to Petaluma? how much more backward thinking are the residents of Petaluma going to allow before they put members on the council that see the “big” picture of the reasons people come to Petaluma.

  6. Jim says:

    This is typical government…

    “The city dipped into the tourism promotion fund last year, taking $75,000 to supplement the general fund”

    Force a tax through under the lie on how it will be used, then get all the corrupt liars to agree to steal the money for their general waste fund. The voters are too stupid to notice. This is what happened with the multiple “fundings” of the Novato Narrows widening. That project has been funded multiple times through lies and deceit, only to have the money stolen and wasted.

    Given there are ample places to stay in Rohnert Park, it makes no sense for Petaluma to look to gouge travelers for more money. I will encourage my friends and family to stay in Rohnert Park if this passes. I’m sick of governments complaining about the lack of money and thinking of new taxes to make up short falls.

    Not once have I ever heard a government official say their benefits, pay or the union contracts should be cut. Never. It is always “how much more can we take from the people?”. They won’t be getting any more out of my pocket. All I have left in it is “change” after Obama rips me off anyway.

  7. Greg House says:

    Provide police and fire, streets and road maintenance and nothing else. Get rid of all the bureaucracy with layoffs to unnecessary personnel. Honor all existing contractual obligations, but don’t enter into any new ones when the existing contracts expire. Petaluma saved. Taxpayers properly served and happy. You don’t need to do 80% of what you do — so stop. The cities will not change a thing until they actually go bankrupt. Why? The narcissism of their “leaders.”

  8. Money Grubber says:

    The absolute problem with government is that it literally believes it should be allowed to operate from year to year without any adjustments to its functions and overall funding.

    They actually believe that they are so important that they just can’t continue to downsize themselves as a solution rather than squeezing more money out of the private sector.

    Note to government bureaucrats: you really aren’t that important, you know. You still have all your departments and all your programs intact. You don’t need to raise taxes.

  9. David J. Spencer says:

    Neat idea; tax the transient population, as it has no local voice in how things are done & complaints can be safely round-filed.

    Kinda like the speed-traps set up in Nevada; mostly out-of-staters are hit. Who’s gonna come back & fight a $50.00 ticket?

  10. On the Road to Recovery says:

    Cutting government is never an option for these progressives. Raise taxes on visitors and business travelers who might want to spend some money in Petaluma.

    The pittance this tax would raise will not make even a tiny difference in the Petaluma deficit.

    The council needs to go back to the drawing board and think again about what really needs to be cut to balance the budget. Programs like city pensions and feel good projects would be a start.