Would a .75 percent city hike in the meals tax charged at local restaurants spark an outcry among local diners?
Perhaps not. That level of city "option tax," if you will, would only hike the tax charged by restaurants from the state's 6.25 percent to 7 percent — and that may not sound like a financial dealbreaker.
Nonetheless, local restaurateurs such as Cruiseport's Sheree DeLorenzo are right to note that the hiking of a meals tax could indeed lead local clientele, more than tourists, to more likely consider dining out in Rockport or Essex, which have not raised their local meals taxes, instead of Gloucester. And if such a tax hike were to cost smaller restaurants even one party on a given night, that could represent 5 percent or 10 percent of that facility's business, as Dennis Silva of the Topside Grill told city councilors the other night.
For those and a number of other reasons, Gloucester's City Council made the right call Tuesday night by nixing a plan to essentially tack a .75 percent city meals tax onto the 6.25 percent rate charged by the state.
Yes, the rejection means that Mayor Carolyn Kirk and other city officials will have to find another source within the city's budget to cover a lingering $146,000 snow- and ice-removal bill. But that, in its own right, may be one of the most important features of the council's action.
The council's decision to reject the meals tax hike suggests that the city needs to pay its bills, not by raising more revenue from beleaguered taxpayers, but by taking yet another look at its spending. City officials will tell you there are no more places from which to cut, no more nooks and crannies of the city budget from which to cull another $146,000. But the basic answer to that is that taxpayers have no more money to shell out either, and the city must keep its costs within its means.
There are, of course, times when that won't be possible — notably when the city looks to find a long-term solution to its water problems, and as it considers how to cover its share of a potential West Parish School capital project. But addressing more traditional operating costs requires thinking more outside the box — namely looking again to create more viable labor contracts, or perhaps privatizing some services.
Beyond the matter of costs, the council's actions Tuesday night also show a willingness to work with an important part of its business community. It also shows a recognition that, unlike a proposed inn and motel local "option" tax that rightfully bit the dust earlier, a meals tax hike would, for much of the year, target city residents looking to enjoy a night out in their city — the same residents already paying city taxes and fees that include some of highest water and sewer bills in the nation.
And lest we forget, a meals tax would have posed new business obstacles for restaurants who were among the hardest hit of any businesses during the city's August and September water crisis. DeLorenzo said Cruiseport lost some $40,000 over that 20-day period, and Cape Ann Chamber of Commerce Executive Director Bob Hastings has said another unnamed restaurant lost some $100,000 during the same time frame. Forcing restaurants to tack on an additional tax that could alienate even a handful of customers would hardly be good business on the city's part.
It will be no surprise if, given the current economic climate, the city faces new revenue shortfalls — just like the state, which may be required to make further local aid cuts because its own revenues remain in the proverbial toilet. But that can't always mean the city, just like the state, can come looking for more money from taxpayers to make up the revenue gap.
In that vein, let's hope the council's Tuesday night tax decision marks a renewed commitment to working with local restaurants and other businesses — and to reeling in spending, rather than hitting up residents and businesses one more time.
