NEWPORT — During its regular meeting Monday, the Newport City Council voted to raise the city’s tax per booked night on short-term rental businesses from 9.5 to 12 percent.
The approximately 26 percent increase gives the city among the highest transient room tax rates in Oregon. The city’s Finance Work Group recommended the move as means of bridging a structural deficit in the budget that included chronic underfunding of city-owned facilities, proposed as a means of deferring some of the burden from residents to visitors in consideration of the impact of the latter on city resources and infrastructure.
Based on last year’s takings, the increase could provide more than $1 million in additional revenue next year, with $700,000 dedicated to a fund specifically for tourism-related expenditures and $300,000 to the General Fund. Some would be used to fund repairs and maintenance at facilities used by visitors, such the performing arts center, library, visual arts center, Bayfront boardwalk and public restroom facilities. The city also plans to restore a police officer position and add staff in the parks department.
Terry Hopkins, a membership representative from the Oregon Restaurant and Lodging Association, testified Monday to reiterate the association’s opposition to the increase, as other representatives have during previous public meetings. Hopkins urged councilors to forgo the increase and meet with industry members to discuss alternative revenue sources. Some business owners have suggested increasing the total number of short-term rentals available.
Should the council adopt the increase, Hopkins said, the association pledged to work closely with the city to ensure funds are put to their best use according to state law.
After some discussion about the need for public outreach regarding how the tax works and how it will be used, councilors voted unanimously to adopt it, to take effect in 30 days. Projected revenues are already included in the proposed 2020-21 budget, which the council will consider for final adoption later this month.
Oregon statute requires that 70 percent of the increased amount be used for tourism promotion and facilities, with 30 percent to the General Fund. The original 9.5 percent rate was in place prior to a 2007 state law changing the ratio, so it will continue to be apportioned 46 percent to 54 percent between tourism and general, respectively.