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With Sagging Finances Continuing Due to Poor Economy,
Yet Another City Ponders Hotel-Tax Increase

By Neil Gonzales, San Mateo County Times, Calif.McClatchy-Tribune Regional News

Jul. 21, 2009--SOUTH SAN FRANCISCO -- City leaders are considering a ballot measure to raise the hotel tax to bolster sagging finances.

"Because of dwindling sources of income, we thought to help our general revenue," said Mayor Karyl Matsumoto, who added that the proposed increase "makes sense."

On Wednesday, the City Council is expected to consider placing a proposal on the Nov. 3 ballot to increase the transient-occupancy tax from 9 percent to 10 percent, effective Jan. 1.

The measure needs a simple majority to pass and would generate $600,000 to $800,000 a year, according to a city staff report.

That revenue would go into the city's general fund, which covers day-to-day expenses and shows a $5.1 million decrease for the 2009-10 fiscal year, the report said.

That decline exacerbated by the continuing sour economy has led to budget cuts involving park maintenance, the school-liaison program and other services, the report said.

The tax increase would provide "an increased revenue stream" while not falling on residents' shoulders, Matsumoto said.

Hotel guests -- who primarily are out-of-town visitors on business in South San Francisco -- pay the tax, the report said. Hotel operators collect the levy and regularly remit the funds to the city.

South San Francisco would join other San Mateo County cities that will ask their voters to support a hotel-tax raise in November.

San Mateo, San Bruno, Millbrae and

Brisbane are proposing a bump from 10 percent to 12 percent.

The Burlingame City Council on Monday night was deciding whether to float a similar measure during the November elections, while Belmont recently struck down the idea.

South San Francisco's proposal combined with its conference-center tax of $2.50 per room per night would put the city on a comparable basis with neighboring communities pending the ballot outcomes, the staff report said.

However, at least one hotel operator has argued that a higher tax would be a bad idea, especially given today's market in which people are cutting back on travel and lodging expenses.

"Business is very slow right now," said Mike Patel, manager of the Americana Inn Motel.

"If the tax goes high, it's very hard to get people to rent a room. It's getting worse and worse."

Currently, the motel is seeing an occupancy rate of just 50 percent at most, he said. "It doesn't look like summer. It's like winter."

South San Francisco's proposal also would clarify that the hotel tax be applied to the amount paid by a guest even when an online booking company such as or other third party is used to rent a room, city staff members said.

The hotel would remain "responsible for collecting that amount and remitting it to the city."

Neil Gonzales covers education. Reach him at 650-348-4338.

If you go What: South San Francisco City Council meeting Where: Municipal Services Building, 33 Arroyo Drive When: 7 p.m. Wednesday


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