Opinions mixed on meals tax

Ashland residents and restaurateurs offered a range of opinions about the city's 5 percent tax on prepared meals and beverages during a series of public forums on Monday.

The city is gathering public input about the tax, which was approved by voters in 1993 and will sunset in 2010 unless renewed by voters. The City Council will discuss the issue on June 16 and must decide by August whether to ask voters to renew the tax in the November election.

Since its inception, the tax has generated $22.5 million, with $18 million going to make debt payments on Ashland's sewage treatment plant and $4.5 million used to buy park land. The city uses 80 percent of the tax for sewage plant debt payments and 20 percent to buy park and open space land, city officials said.

Ashland upgraded its sewage plant at a cost of $33 million to meet tightening Oregon Department of Environmental Quality standards. The city must pay $1.8 million each year, with payments not set to end until 2023, according to city officials.

The tax on prepared meals and beverages has helped keep sewer bills down, although the City Council agreed to raise sewer bills by 20 percent as of April because of rising costs, a slow economy and some restaurants not paying the tax.

If the tax is not renewed, Ashland Finance Director Lee Tuneberg predicts that sewer bills will have to rise by 60 percent to make up for the lost revenue.

A typical two-person household would see its sewer bill increase from $16.18 per month to $25.88. The monthly bill for a typical four-person family would rise from $21.02 to $33.64, city officials said.

Ashland has used the meals tax money to help buy land for a variety of parks, including Railroad Park, North Mountain Park and Siskiyou Mountain Park. Of the city's 785 acres of park and open space land, 360 acres were bought in part with tax revenue, city officials said.

Restaurateur John Wallace said the tax has obvious benefits because the money is used to help pay the debt for the sewage plant upgrade and to buy park land.

"It allows us as a community to pay a debt and at the same time maintain the natural aesthetic beauty of our area," he said.

But Wallace said the tax puts Ashland restaurants at a disadvantage in relation to restaurants in other towns that don't have a prepared meals and beverages tax. If the tax is renewed, he said he hopes that it can be extended to other businesses, which would mean the city could probably reduce the tax rate.

"I am not against a tax. I think it should be more broad-based. If it were a general business tax, I would imagine it would be less than 5 percent," Wallace said.

The city has no statistics about whether people from surrounding communities eat out less often in Ashland because of the tax, although there are anecdotal reports of some diners avoiding Ashland, said city of Ashland Management Analyst Ann Seltzer.

Oregon Restaurant Association Southern Oregon Regional Representative Drew Baily said instituting a sales tax across all businesses in Ashland could be detrimental.

As an Ashland resident, Baily said he appreciates that the tax keeps sewer bills down.

"It keeps our sewer rates lower at both a residential and a business level," he said.

Using real sewer bills from two different restaurants, city officials said the smaller restaurant would see its monthly bill rise from $217.28 to $347.65 in July, the peak tourist period. The larger restaurant's bill would go up from $269.52 to $431.23 in July.

But Baily also said the tax is an industry-specific sales tax that targets restaurants. He said if Ashland voters want to approve the tax, they should also support restaurants.

"If they support it, they need to dine out. If you're going to support the tax, support the industry," he said.

Baily advocated that some of the tax revenues be used to promote restaurants and support culinary training, perhaps through scholarships for students or by helping to attract a satellite school of an established culinary institute.

Ashland resident Viki Ashford said she frequently uses parks and trails, and also volunteers at North Mountain Park. She said she is not opposed to taxes.

"I believe if there's something you use, you should have to pay for it," she said.

But Ashford questioned whether the prepared meals and beverages tax is used in the best way. For example, the parks department could use the money to maintain existing parks, rather than buying new land that it can't afford to develop into parks and maintain, she said.

Parks Director Don Robertson said the Ashland Parks and Recreation Commission will talk in June about whether to ask the City Council to put language before voters in November to allow the department to use tax revenue to develop and renovate parks — not just buy land — if the tax is renewed.

During morning, afternoon and evening public forums on Monday in the Ashland Community Center, people who dropped in had a variety of ideas for changing the tax.

Suggestions included charging the tax only during the tourist season, using the tax only to pay sewage debt without any money for parks, eliminating the tax and adding a 75 cent fee on Oregon Shakespeare Festival tickets, exempting catering and convention meals and not charging the tax at grocery store bakeries and delis that prepare food.

For more information about the prepared meals and beverages tax, visit www.ashland.or.us/Page.asp?NavID=11867.

Staff writer Vickie Aldous can be reached at 479-8199 or vlaldous@yahoo.com.

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