Updated: Jan 27, 2021
MYTH: The Sonoma County tourism industry will quickly recover from the COVID-19 pandemic generating a steady stream of revenue for the schools and fire district beginning in July 2021.
FACT: This couldn’t be worse timing for the tourism industry and the economy it funds. In the past 10 months, the Sonoma County tourism industry has lost more than 50% of the revenue normally generated during this time and 30% of its workforce. Workers and businesses are suffering, with area lodging properties, restaurants, wineries and breweries still suffering from recent natural disasters and COVID-19 related issues. Recovery will be longer and slower and more businesses will fail. According to tourism industry indicators, Sonoma County will NOT recover its pre-pandemic tourism-related revenues until 2024. Transient Occupancy Tax is not a steady source of income. Revenues are based on seasonal ebbs and flows, making relying on TOT a dangerous expectation. Research from Dr. Robert Eyler from Sonoma State University (Economic Forensics and Analytics Report Study) suggests that the yield from the measure will not be nearly as large as the proponents say it will.
MYTH: The TOT tax hike will only impact a small portion of West County.
FACT: Dissuading potential visitors will negatively impact other tax collections and nullify the impact of increase. As with any tax increase, the market for overnight stays would change as a result of the increased tax rate. According to Economic Forensics and Analytics, for every 1% increase in the cost of staying overnight in the defined area consumers cut back 4.1% of overnight stays, the reduction in other taxable transactions (sales tax, property tax) equals the new TOT revenue such that there is no net gain for the county overall. Under that scenario, the price sensitivity of consumers leads to other parts of the county economy transferring the TOT revenue to the defined area at the cost of sales and property tax revenues that would have been in place but for the new tax rate.
MYTH: The resulting rate of TOT will have no impact on consumer travel decisions.
FACT: This increase would make the TOT tax in this region among the highest in the state. Nationwide, the average TOT rate for similar destinations is 14.9%. This is most acute within the group sector. While West County doesn’t have a convention center, it does host numerous weddings, corporate retreats, incentive trips and other events that create significant revenue for businesses. Those who plan these meetings most definitely check the overall costs of the event before booking.
MYTH: The hospitality industry and lodging properties impacted were part of the discussions prior to crafting the measure.
FACT: The hospitality industry was never informed or consulted, and has yet to be allowed access to the county’s research data and projections in spite of repeated requests for this information.
MYTH: Raising the TOT to fund schools is an innovative approach.
FACT: Raising taxes is an old-school, outdated approach to solving challenges. This measure doesn’t create a strategic, long-term approach to addressing declining school enrollment, housing costs, the potential for raising funds through creative programming or the general appeal of the area for families. In concert with the Sonoma County Taxpayers Association, we believe this tax is being used to manage a problem instead of addressing it at a huge cost to the local economy. More time is needed to work together, creatively solve problems, and avoid creating new ones.
There are existing vehicles for state and local school and emergency services funding, and this measure overrides them. This tax would potentially set a precedent that burdens local business while not finding real solutions for the school district’s challenges. The last three years have proven how critical it is to fully fund emergency services. Trying to fund them from TOT, an unsteady funding stream, could be more dangerous than not funding at all.
Other destinations across the country have addressed these very issues and have established truly creative approaches such as charging travelers for use of emergency services (Summit County, Colorado) and working on public/private partnerships for schools.
Sonoma County is smarter than Measure B.
MYTH: The tourism industry is against kids and firefighters.
FACT: The hospitality industry has supported educational programming for years. The Sonoma County Hospitality Association hosts its annual Chefs of Tomorrow program, offering financial resources and opportunities for young people to explore careers in the culinary arts. Individual lodging property owners have supported a number of programs at schools throughout the county.
“The tourism industry definitely supports emergency and fire services and education. This is not about support, it’s about opposing an antiquated method of support,” said local innkeeper Bryce Skolfield. “We need to look at alternative, creative funding options, such as charging visitors who use the emergency services (like they do in Colorado). This measure is an outdated, unoriginal way to raise money when the times and circumstances have changed dramatically. Sonoma County is smarter than Measure B.”
MYTH: The funds raised from this TOT tax hike will be enough to ensure a long-term future for El Molino High School and the Bodega Bay Fire District.
FACT: There is no way to determine how much will be raised during this tumultuous time. But, due to declining enrollment (which will not rise due to a number of factors outside this tax hike), and as the revenues will be shared with the Bodega Bay Fire District, the funds will not be enough to ensure El Molino High School will continue to operate.
The Bodega Bay Fire will soon merge into the Sonoma County Fire District. The real funds for the continued operation of the fire district will occur with a larger request that will be on the November 2021 ballot.
This is a bandaid for the current challenges (an unpredictable one) and not a strategic, long-term solution.