When the virus came to the coast of California the people did not. As a result, the transient occupancy taxes that help Half Moon Bay officials sleep at night have disappeared like those little bottles of hotel shampoo. Now the city and the industry that is its most important source of income are in deep trouble.
The city is expecting hotel tax receipts to be off by $2.1 million for the current fiscal year and another $4.5 million in FY 2020-21. City officials acknowledge this is just a guess, as no one knows how long people will stay away or whether visitors will flock to the coast when the coronavirus pandemic ends. In other words, it could be even worse.
The TOT represents the largest leg of the city’s suddenly wobbly financial stool. The next most important source of municipal funding is sales tax and that isn’t exactly rolling in either.
These taxes are both known as “pass through taxes,” meaning businesses collect the money at a given level — 12 percent of the hotel bill in the case of transient occupancy tax — and then pay it directly to the city every month. It is noted on the bill and for all intents and purposes belongs to the city the moment a hotel takes the money.
So, it’s incredible that any hotel owner would even think to ask the city to defer or waive or otherwise delay payment of this money it has already collected. It simply isn’t — or shouldn’t be — available to the enterprise regardless of the emergency. It’s not money hotels expected and did not receive; it’s money people already paid for the right to stay in Half Moon Bay.
City officials say two local hotels politely inquired about deferring March payments and were told that wouldn’t be possible. And that was the end of it. We hope.
Times are tough. They are tough for many businesses and particularly so in the hospitality industry. Look no further than the main driver of the city’s income, the Ritz-Carlton, Half Moon Bay. State unemployment reports reveal the resort has laid off more than 500 workers, among the most layoffs recorded by any single Bay Area business. Times are tough for homeowners, who paid four- and five-figure property tax bills earlier this month. Times are especially tough for renters, who have long paid dearly for their tenuous foothold on the good life in the Bay Area.
But we need government services — particularly at the state and local levels. Right now, government accountants are merely guessing just how sick COVID-19 will leave our institutions. San Mateo County officials recently told San Mateo County Harbor District officials they expect property tax receipts to be off by a mere 1 percent. City officials calculate their TOT losses based on the first two months of crisis and a whole lot of hope. These could be off by hundreds of thousands or even millions of dollars.
Keeping our house of cards upright will require a full deck. We all must share our tax burden equitably and pay what we already owe on time. Local government can’t afford concessions like a deferral in the hotel tax.
— Clay Lambert