Letter to the Editor
RE: Two City tax measures
The two City tax measures on our ballots (21-205 and 21-206) have been presented as an either/or matter. Either we vote to raise our city gas tax to 5 cents per gallon year-round, and impose a new 5% tax on the sale of all prepared food & beverages, or the financial burden of taking care of visitors will fall entirely on residents. The City’s media predicts dire consequences if the ballot measures fail.
However, I will be voting NO on both these measures because there is a far more equitable way to cover visitor water demands (think of all that toilet flushing during drought conditions), and the wear and tear of tourist facilities and roads made by 30,000 visitors each day. The more equitable way is enforcement of Municipal Code.
The City’s policy of “voluntary compliance” regarding short-term rentals, and its refusal to pursue fines for documented violations, has left hundreds of thousands of dollars on the table. Most years, the City walks away from more than a million dollars by forgiving fines, “settling” with violators, or waiving penalties entirely.
Why is “voluntary compliance” the City’s policy? According to the City Manager, pursuit of fines is too expensive and not worth staff time. As of June 2020, Rogue Brewery had racked up $390,000 in fines for wastewater treatment violations (violations prior to 2019 were ignored). When the company asked for “relief” from those fines, their request was granted. Why? According to the 2020-21 Hit Wish Packet, “These fines were not intended as revenue. They are intended as a tool to motivate [Rogue] into compliance.” However, Rogue’s wastewater discharge violations continue to accumulate at $1,000 per day, and all fees continue to be waived.
When illegal vacation rentals are identified, there are no fines and no request for past-due room taxes. The owner is merely asked to stop operating. If they don’t, a citation is issued. If the owner doesn’t show up at Municipal Court, even the citation fee is dismissed.
Transient room tax revenue is second only to property taxes in what funds this city. But Newport has never audited transient room taxes paid by hotels, motels, and short-term rentals so there is no way to verify the accuracy of what is voluntarily reported. Initiating audits of all vacation rentals was approved by the Audit Committee, but two years have passed and there is still no plan to begin the process.
Seventy percent of the funds the City receives from transient room taxes must be used for “marketing and tourist facilities.” On May 25, 2021, the Budget Committee recommended that the City Council “pursue legislative changes to allow the tourism portion of room tax funds to be utilized for street improvements.” Newport currently spends more than a half-million dollars for tourism marketing through the Newport Chamber of Commerce and the Destination Newport Committee every year, but no one living in Newport would claim we don’t have enough tourists already. Certainly, some of those marketing dollars could be redirected to cover repairs of city facilities and roads caused by the visitors we already host.
In the City’s Financial Sustainability Report V2 (dated 5-13-20) under Section 8: “Other Revenue Concepts,” item 8.4 states, “Review existing code provisions and collection practices of ordinance, penalties, court fees, and court fines.” Perhaps City staff has forgotten this directive. Perhaps it can take a moment to remember.
The City’s lack of enforcement regarding Municipal Code and its lack of pursuit when fines are levied was the topic the August 17, 2020 City Council Work Session. The Budget Committee requested that this topic be addressed, and it added $100,000 in fine collection to the budget as incentive for improvement. A year has passed. Nothing changed.
Both proposed tax measures would affect residents far more than visitors and hopefully they will be defeated. The City could obtain all the needed revenue these measures would raise by using room tax dollars, enforcing Municipal Code, issuing citations to violators, and by pursuing past-due taxes, fines, penalties, and interest. They’ll find plenty of money in plain sight.