Town Meeting members voted down a local meals tax Thursday, with many members saying that the tax would hurt local restaurant owners and take more money out of the pockets of residents in difficult economic times.
The divisive proposal was brought forth by town manager, John Curran who said that the revenue would go towards capital improvement projects and paying down the debt.
The proposal called for an additional .75 percent tax on top of the 6.25 percent meals tax collected by the state. In all, the local portion of the meals tax will would have amounted to an additional 75 cents on a $100 bill.
But members were not hearing it and complained that residents had seen their property taxes go by an average of 2.5 percent the last several years, the maximum allowed by law without a voter override.
“This is not going to bring in the revenues they think it’s going to,” said Rep. Anthony Ventresca, a member of the Finance Committee.
Rep. Madeline Sargent said she was concerned that the tax would be harmful to restaurant owners and said that four establishments had closed in town recently.
Curran tried to allay the concerns of members by telling him that he spoke to several restaurant owners and, while they weren’t happy about it, they didn’t think it would harm their business.
“People aren’t going to make a decision not to get a meal based on an extra seven cents on a $10 bill, ” Curran said.
Still, it was not enough. The proposal was overwhelmingly defeated.
Curran was able to push through a two percent room tax on the three hotels in town.
Currently, the state levies a four percent tax on hotel rooms. Under the proposal, Billerica will now levy an additional two percent on consumers.
“I don’t think it will affect someone’s decision to get a room in Billerica or Lowell,” Curran said. Curran also said that he thought consumers made decisions on buying hotel rooms based on geography.
Rep. Marti Mahoney agreed. “Everyone’s doing it,” she said. “At a hotel, there’s always a little expense there for the local town.”
In recent years, Town Meeting members have rarely had the opportunity to weigh in on tax issues. Curran explained that the need for the new taxes was born out of the necessity to find a way to replace some of the $3.6 million in lost state aid since 2009. He promised that the money would be put to good use.
“We’re focusing our energy on capital improvements and debt service and this revenue will go in that direction,” he said.
Town Meeting adjourned for the Fall session will reconvene in April when members will debate what promises to be a controversial budget.
The Debt service that Curran is talking about is the additional debt he will take-on when he gets the new Tax. He is not talking about addressing the debt service we currently have. So far, his track record on capital improvements has been abysmal — in fact, some of the approved projects were not even completed and the money was used for other purposes. His model for increasing revenue through growth has worked in the past –but, will not work this time. It is a much different economic environment — real estate values will go down or remain static for at least a decade and business growth is hampered by the same environment as well as the lack of real job growth/disposable income. The only commercial or business growth will be in government subsidized or tax incentivized businesses. Billerica has reached its peak density or build out under the single family home framework – new development will be severely limited – not only because of our current single family home zoning structure but, also because of the crash of the real estate growth model. Curran will try to borrow in order to stimulate growth — but, all that will be accomplished is higher taxes, fees, and rate increase with no real growth being achieved – more and more of our tax revenue will go into servicing the debt and by the time he figures it out the Town will be in serious financial trouble.