The Bad News Keeps on Coming

by Mark Scaramella, July 8, 2009

Last week we reported that this County's once thriving timber industry had collapsed.

This week, we find that the County’s beleaguered hospitality business was struggling too.

At the June 23rd Board of Supervisors meeting, the last meeting prior to the Board taking three weeks off for a respite from the weekly deluge of bad fiscal news, the Board discussed raising the Bed Tax, also known as the Transient Occupancy Tax or TOT, from its present 10% to 12%.

Because the 10% tax was set by ballot initiative in the 1990s, an increase of 2% would require the approval of the voters, and to get it on the November ballot the proposed measure would have to get to the County Clerk by early August.

According to CEO staffer Steve Dunniclif, a 2% increase in the Bed Tax would produce about $700k per year of new money for the cash-strapped county, but would also make Mendo's the highest bed tax on the Northcoast.

Also discussed was applying the current 10% bed tax to private campgrounds, which Dunniclif said might generate another $150k per year.

Mendocino County is broke and getting broker by the week. Taxing tourists for upwards of $700k on top of the nearly $3 million the bed tax now generates is worth considering.

As Supervisor Colfax pointed out, “I don't think for $3 you decide not to come up to Mendocino County on a $300 room, 1%. This is the easiest and gentlest of all possible taxes. It does not impact local residents. You don't choose to visit Oakland because its bed tax is lower than San Francisco's. It might be an extra $4 on a $200 per night place. You could pay for a couple of Mental Health workers of Social Service workers with that. So it's worth it.”

Supervisor John Pinches noted that he wasn't a big supporter of taxes, but that he had no problem asking the voters what they think.

The Lodging Industry, as represented by its Treasurer, Jo Bradley, is “absolutely against” raising the Bed Tax.

Why?

“We are struggling!” said Bradley. “People, call and say, 'What can you do for me?' I can't pay my mortgage because I have to give them a discount. One innkeeper dropped his rates for the winter, his average daily rate went in the toilet, occupancy went up, he had to pay staff for the time they were there, and he came out behind financially. He lowered his prices. So you have less TOT and we have less BID [Business Improvement District tax at 1% on top of the bed tax]. The County has only lost 6% of its average TOT so far. Other neighboring counties lost up to 30% because we are affordable. If you up our TOT we become less affordable. Then we start losing and it's a slippery slope. Lots of innkeepers are treading water, going down and coming back up. If we don't get the visitors, it doesn't matter. They won't come. We asked our members for ideas and they answered, Why not the campgrounds? People who are going camping will have a less hard time struggling with that price than with us raising ours. I tell callers it's 11% [TOT + BID]. And they go, 'Oh' because they want to know their bottom line and what they're gettin' for every penny. I implore you not to raise the TOT.”

Supervisor John McCowen then noted, “I don't think there's any support for raising the TOT. Maybe on the campgrounds. It's an equity issue.”

An equity issue? Asking campers to pay $3 extra on a $30 circle of dirt is fairer than asking a person renting a $300 room in Mendocino to pay six more dollars?

Fort Bragg Supervisor Kendall Smith agreed with McCowen: “It's an equity issue as we just heard from the public.”

“The public” consisted entirely of the Lodging Association’s Treasurer. No one else spoke.

Smith added, “[The campground tax] is important revenue and we ought to tap into it.”

The Board voted 5-0 to ask staff to prepare a ballot measure  to ding campers a bed tax, “against the campgrounds,” as Mr. Dunniclif described the bed tax as applied to campers.

The Supervisors then drifted into light comedy.

During yet another fruitless, wholly theoretical discussion of perhaps, maybe, possibly privatizing the six county-staffed transfer stations, the Supervisors concluded their speculations by asking staff to “explore” the options.

Again.

Solid Waste of Willits rep Ernest Jones told the supes that it would be better to simply negotiate a trash disposal deal with the County’s only two trash haulers than to go out for bid when you know those two (Solid Waste of Willits and Empire Waste) will be the only bidders and the County already has contracts with them. Jones also noted that it would be a waste of the $65,000 the County says development of an RFP (Request for Proposal) would cost.

As the discussion meandered on, the $65k per RFP number was questioned.

CEO Mitchell said it couldn’t be the number.

Supervisor Pinches snapped, “That was the number! I have it in a report in my office.”

Mitchell said it probably was the cost of doing five RFPs for last year.

Pinches grumbled that the figure came directly from the CEO’s office.

Transportation Director Howard DeShield said it might have been the cost of all the RFPs the department did last year.

Mr. Jones was asked back to the podium to explain where he got the number.

Mr. Jones said that it was reported in open session a few weeks ago by County Solid Waste manager Scott Miller. “And several people said they didn’t believe it. ‘That can’t be right!” “You’re kidding,” etc.

The debate over the true number was wrapped in long-winded statements by the various participants (which we can’t transcriber in full here), all of whom took varying degrees of offense at having their numbers questioned.

Finally, after maybe 20 or so minutes of round and round, Pinches asked CEO number cruncher Jennifer Wyatt if she knew where the number came from.

Wyatt replied, “The $69,000?”

Pinches replied, “No, the $64,000.”

Wyatt continued, “Well, I think that's the increase in value of the contracts that just went out for bid. It’s not the RFP process cost. It’s the increase in the contracts.”

Pinches immediately calmed down. “That’s probably right, but the notation didn't say that.”

CEO Mitchell added, “I’m sorry that may have confused you. But we would not spend $65,000 to prepare an RFP.”

Pinches was still somewhat annoyed. “It should have been corrected when Mr. Ward (Proprietor of Solid Waste of Willits) brought it up two weeks ago.”

Supervisor Colfax, whose garbled rhetoric tends to add to the prevailing confusion, used the minor mix-up as an opportunity to lobby for, of all things, clarity.

“The system is not efficient. We are not getting the clarity we need. I heard the $65,000, yes, and I heard people say ‘you're kidding.’ You were there [looking at Ms. Wyatt] and you didn't clarify. It would have saved misinformation from going out. We need to be direct and clear and tighten up the operation. We are facing potentially catastrophic consequences in my district and the County and we do not have a good clear understanding on the Board. The fact that it’s either $69,000 or $65,000 or $64,000 demonstrates that with brilliant clarity. It’s misinformation, but nobody bothers to provide clarity. We need a white paper for a solid waste management review covering the present and the prospects. Then purveyors can respond. Maybe nothing will come of it. What will we do on the south coast? What's the plan? I guess I'm ranting. We’re going round and round.”

By the time the Board finishes tantruming and excoriating staff for minor errors, the cost of the RFP is likely to exceed $64k.

Staff, of course, was asked to continue to “explore” the issue.

Meanwhile dump fees continue to go up, trash continues to be dumped on local roadways and the County is spending a big chunk of its general fund (almost $300k) to subsidize the operation of their Solid Waste Division.

In a final attempt to make a dent in next year’s ever-deeper budget deficit, Health and Human Services announced that they had laid off eight more line workers and defunded four vacant positions, which should result in an annual savings of $750k.

HHS Director Carmel Angelo said that in the last three years her department has gone from 726 filled positions to 625, and that a upwards of 40 supervisory positions have remained vacant which, Angelo said, “helped the cause.”

The budget deficit remains a little over $1 million but the Board had no more ideas how to make it up, deciding to “temporarily” balance the 2009/2010 budget by applying their mythical “reserves” to paper it over.

When Supervisor McCowen pointed out that the County’s total budget is $8 million more than last year yet there’s still a deficit, Ms. Wyatt quickly responded, “That’s all Department of Transportation funding — Prop 1B, Prop 42. State and Federal dollars.”

When it came time to formally vote on the “temporarily” balanced budget Pinches asked Colfax what his vote was.

“No,” mumbled Colfax.

Pinches: “Are you opposed?”

Colfax: [Silence.]

“You're opposed, Supervisor Colfax?”

“No, replied Colfax. “I just wasn't paying attention. I was getting ready for my vacation.”

The supervisor may have been joking.

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