Santa Rosa voters to decide fate of business, lodging taxes

It was last adjusted in 1993 and the increase is expected to bring in an additional $1.2 million a year in taxes.

The current rate is the lowest in the county, where other rates range from 10% in Petaluma to 14% in Healdsburg. The proposed 11% tax rate would still be among the lowest.

Two additional, existing fees charged in the city to help pay for tourism promotion, however, mean the new overall lodging tax, if Measure FF is approved, would go to 16%, the highest in the county along with Healdsburg, which also has an add-on to its base rate.

Proponents say the increase is unlikely to deter tourism.

“We want to make sure we’re still providing great value for visitors to come here and we believe that Measure FF keeps us in that sweet spot where we’re still an attractive and cost-efficient destination to come while bringing additional revenue to the city,” Stapp said.

Tax revenue will help pay for city services

Voters are being asked to approve the measures as the city seeks to close an operational gap projected to hit as much as $40.5 million in the next five years as labor and operational expenses increase, sales tax income flattens and one-time funding that pays for critical programs evaporates.

City administrators are piecing together a plan that could help trim some dollars in the short term while setting up the likelihood of larger program cuts and layoffs in the future.

They will present their proposal to the City Council on Tuesday.

Revenue from the two tax measures will go into the general fund, which pays for salaries, benefits and other operational expenses.

The campaign says it will help fund maintenance and improvements of such things like city roads, parks and public safety, efforts to clean up the city and sustain other essential services.

The $4.2 million in projected new revenue is about the combined cost of operating the city’s inRESPONSE crisis intervention team and the safe parking program that provides people living in their vehicles a place to park while working to find stable housing.

Rogers and Stapp acknowledged the additional revenue, while important, isn’t intended to be a cure for the city’s financial problems. Rightsizing city government to resolve the structural deficit will require organizational changes and efforts to boost economic growth, they said.

“Whether or not the measures pass, we’re still going to have to look at some restructuring,” Rogers said. “We are only seeing the fiscal challenges get deeper and deeper if we don’t do anything so we’re going to have to look at that either way. This will just give us a little more time.”

Opponents say increases will hurt local economy

Santa Rosa resident Eric Fraser, who is spearheading opposition to the measures, said the tax increases will hurt the local economy rather than generating more revenue.

In a ballot argument submitted in opposition to the business license tax and on his campaign website, Fraser characterized the revised proposal as a backroom deal that took the burden off large businesses and will place greater strain on small operators.

The increased tax liability will force small businesses to close or relocate, he contended, and consumers should expect to see costs for goods and services “skyrocket” as the cost of the increased tax liability gets passed down to them, he said.

Similarly, Fraser said the increased lodging tax rate will deter visitors from coming to the area and will squeeze not just tourists but family and friends visiting, people in town for work and residents who need shelter in an emergency.

The stakes are personal for him — Fraser owns a property in Santa Rosa that hosts a short-term rental and he’s been a vocal critic of the city’s rental regulations. He’s pushed for greater transparency in how rental and lodging tax assessments are spent.

Fraser and other vacation rental operators have raised concerns that they are being unfairly targeted and that they will be impacted if the cost of visiting the area increases.

“With the addition of the business tax, and the increase in TOT, this will raise the cost of visiting Santa Rosa, and make our city less competitive than the surrounding areas,” the Sonoma County Coalition of Hosts and Friends wrote in a letter to the council opposing the measure. “Not only do hosts lose in this equation, but any restaurant, winery, book store, gift shop, coffee shop and other small businesses that cater to people who visit our county will see a decrease in revenue in our city.”

Fraser said the city shouldn’t balance its budget off the backs of local businesses and accused the city of financial mismanagement, arguing that revenue will go toward padding the budget rather that to serve residents.

“The Council and senior staff have driven Santa Rosa to the brink of bankruptcy. Managing the chronic financial problems starts with accountability,” he wrote in his ballot argument. “Now is not the time to add more revenue into a mismanaged program.”

The Yes campaign said the opposition is using scare tactics to convince voters to oppose the measure and the group’s claims are misleading.

The measures will not disincentivize business growth or tourism and they ensure everyone is contributing to city services, according to the campaign.

Despite some opposition, the campaign so far has been relatively muted, overshadowed by a crowded ballot with scores of local and state measures.

Backers of the two Santa Rosa measures didn’t report any contributions in the latest reporting period, according to Sept. 26 campaign filings, though the political arm of the Santa Rosa Police Officers Association contributed $10,000 on Oct. 11.

Opponents also didn’t report any fundraising during the latest finance period.

Stapp said the campaign is confident about its chances but said it will be critical for supporters to make the case to voters as they prepare to fill out their ballots.

The campaign intends to ramp up door knocking, send out a second mail piece and promote the measures on social media and through radio spots.

You can reach Staff Writer Paulina Pineda at 707-521-5268 or paulina.pineda@pressdemocrat.com. On X (Twitter) @paulinapineda22.