Richard Silverman is a solid Republican
So why is the Manteca city councilman willing to lead the charge to increase a tax?
The answer is simple. Manteca has pressing needs and what better way to meet those needs than increasing a tax that hardly any Manteca resident pays — a hotel room tax.
“As a Republican you’re supposed to be against all taxes,” Silverman said. “But in reality, taxes are how you pay for things.”
And as far as Silverman is concerned, a room tax is an ideal tax as it doesn’t require residents to pony up. How and what it generates — as well as inroads it can make on increasing municipal services without costing local taxpayers a penny — is why Silverman said moving forward with a room tax hike is a top priority.
Silverman wants to take the city’s 9 percent room tax — expected to generate $1.2 million in the fiscal year starting July 1 — up to 12 percent.
That’s the self-imposed cap the city made on room tax increases over the first 10 years that Great Wolf Lodge is operating that Manteca made in a deal to secure the 500-room hotel and indoor waterpark breaking ground this summer on 30 acres the city is selling west of Costco.
Silverman noted increasing the room tax doesn’t increase the burden on local taxpayers and it doesn’t hurt business.
Silverman said when he travels to places such as San Diego he pays a room tax that is higher than a proposed 12 percent room tax would be in Manteca.
Taking the tax from 9 to 12 percent means Manteca would still be below the statewide average. It would also be lower than Garden Grove (where Great Wolf has a resort) at 14.5 percent, San Francisco at 14 percent, and Los Angeles at 14 percent. At 12 percent it would match Sacramento, Elk Grove, Bakersfield and Fresno.
Silverman wants to see the measure on the ballot this November. Not only has he vowed to push for that to happen but he’s committed to contributing funding once a committee is formed to campaign for its passage as well as devote time to working on reaching out to voters to explain why the tax makes sense.
What is at stake is significant. Manteca expects to receive $1,210,000 in room taxes during the fiscal year starting July 1. If a 12 percent room tax were in place that amount would be $1,503,333.
After the first full year of Great Wolf being open, under a 25-year room tax split that was negotiated the city would receive $581,700. Given that any increase up to the capped 12 percent would go 100 percent to Manteca, having the 12 percent rate in place when Great Wolf opens that would bump Manteca’s annual room tax from Great Wolf up to $2,023,700.
That means if Great Wolf were open today and the 12 percent tax rate was in place between existing hotels and the indoor waterpark resort, Manteca would have been able to count on almost $2.4 million in additional funding in the upcoming fiscal year.
The impact measured by what the city would be capable of doing is significant. Given that 62 percent of the general fund goes to public safety, that means $1.4 million more a year would flow into the police and fire budgets. Given salary and benefits account for more than 80 percent of general fund expenditures, around $1.1 million would be able to go toward staffing. Realizing there are other needs besides frontline firefighters and sworn police officers in each department, if you assume $800,000 of that goes to first responder positons the city would be in a position to possibly hire up to seven more police officers and/or freighters.
Any plan to impose or increase a tax must take place at a regularly scheduled general election under state law. The only one coming up prior to Great Wolf’s targeted opening in early 2020 is this November.
If the tax hike was approved in November, it would go into effect in April 2019 meaning specialty construction workers needed to build the indoor waterpark resort that come into Manteca from outside of a reasonable commute distance would be staying in local hotel rooms paying a 3 percent higher tax to further enhance Great Wolf’s positive impact on city finances.
The importance of the room tax as a revenue source to cover the cost of services Manteca residents need or want can’t be overstated.
The room tax is the fastest growing source of tax revenue to run the City of Manteca’s day-to-day operations.
In the 2007-2008 fiscal year, the 9 percent charge on top of hotel room bills brought $475,000 into city coffers. In the fiscal year starting July 1, the transit occupaancy tax as it is formally called is expected to generate $1,210,000. That’s an increase of 154.7 percent.
During the same time period property tax receipts were $10,795,100 a decade ago and are expected to hit $16,477,355 in the next fiscal year. That reflects an increase of 52.6 percent.
Meanwhile local sales tax (excluding the Measure M public safety tax), was $6,790,000 a decade ago and is expected to reach $12,696,103 next fiscal year. That translates into an 86.92 percent increase.
Back in 2011 the room tax accounted for roughly 1.3 percent of the revenue in the general fund. In the upcoming fiscal year, general fund revenues are pegged at $42,237,049 with room taxes accounting for 2.8 percent of all incoming receipts.
25-year room tax
sharing deal with
Great Wolf Resorts
Under the agreement involving the projected $4,237,000 in annual Great Wolf room tax receipts:
*Great Wolf would receive $2 million annually for 25 years to assist with the “significant development costs” associated with the resort construction.
*For the first two years Great Wolf would be reimbursed on a pro-rated basis with no interest for $1.6 million in fees they need to pay up front as well as reimburse $756,465 in permit and plan fees the city incurs processing the project. Any shortfalls would be rolled over into future years.
*The city would be paid the appraised value of the 30 acres amortized over 10 years with any shortfall rolled over into future years.
*The city would be reimbursed for $7.6 million in deferred fees such as for development growth fees and sewer connections amortized without interest over a 20 year period. Any shortfalls would be rolled over into future years.
*The remaining room tax would be shared with the city receiving 25 percent and Great Wolf receiving 75 percent for the first 10 years. Then for the next 15 years the split is 50-50 before the city receives all of the room tax in the 26th year and thereafter.
If the room tax stayed at 9 percent and room bookings and prices stayed flat, after 10 years Manteca would receive $2.1 million in room taxes from Great Wolf. It if were at 12 percent, Manteca would receive $3.4 million annually after 10 years. Combine that with other hotel room tax receipts (while assuming no change in what is collected) Manteca would receive $3.2 million at 9 percent and $3.6 million at 12 percent
Then after 25 years when the split ends, the 9 percent room tax would translate into $4.4 million a year for Manteca while 12 percent would jump it to $5.4 million. Combine that with other hotel room tax receipts (while assuming no change in what is collected) Manteca would receive $5.3 million at 9 percent and $5.7 million at 12 percent
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
