The city's tourism-related tax revenues slumped in 2008-09 as the recession took its toll on restaurants, bars and hotels.

The city's tourism-related tax revenues slumped in 2008-09 as the recession took its toll on restaurants, bars and hotels.

Revenue from the city's food and beverage tax dropped 4.6 percent — by $89,600 — during the fiscal year that ended on June 30, compared to the previous year, according to the city.

Revenue from the city's transient occupancy tax, applied at hotels and similar establishments, increased slightly for the year — but only because the city raised the tax from 7 to 9 percent in October, said Lee Tuneberg, the city's administrative services and finance director.

The hotel tax revenue was up 8 percent, but city officials were expecting it to increase by at least double that, he said.

"We think it should have been a lot more than an 8 percent increase," he said. "We raised the tax 28 percent."

The city brought in $1.87 million from the meals tax and $1.64 million from the hotel tax during the entire fiscal year.

Esther Travis, general manager at the Best Western Bard's Inn on North Main Street, said the past year was the worst she can remember, with fewer guests and more empty rooms.

"We've been here since the '60s and I don't think that we've ever been down this much," Travis said.

Still, it appears that business is picking up, judging from the number of hotel bookings recently, she said.

"It seems like the summer season kind of started off a little slow and now it's kind of in full swing," she said. "We're hoping at the end of the year to at least break even."

Tax revenues did pick up during the summer months — Ashland's tourist season — but were still lower than the same period last year, city data shows.

Meals tax revenue was down about 2.2 percent in the fourth quarter, the period from April 1 to June 30.

Revenue from the hotel tax increased by 25 percent during the fourth quarter, but still fell short of the city's expectations, Tuneberg said.

"We were expecting 28 percent and we got more like 25 percent," he said. "So it seems like we're closer to a 2 to 3 percent reduction between years on sales."

Because the city's coffers aren't as full as officials had hoped, some programs may go unfunded, Tuneberg said.

Tourism-related groups, such as the Oregon Shakespeare Festival and the Ashland Chamber of Commerce, receive 70 percent of the hotel tax revenue. The remaining amount goes to city programs and public-safety divisions, such as the police and fire departments.

About 20 percent of revenue from the city's 5 percent meals tax goes to pay for open space in Ashland, and the rest goes to pay the city's debt on its wastewater treatment system.

In November, voters will be asked whether to renew the food and beverage tax for another 20 years.

Because officials expected tax revenues to drop, the city raised water rates by 10 percent and sewer rates by 20 percent in April.

"We were anticipating a shortfall and it's as bad as we expected," Tuneberg said. "It was fortunate that we raised rates."

Meanwhile, the city will continue to monitor tax revenues, he said.

"We're just going to keep bumping along and see how the economy's going to do and see how our businesses are going to do," he said.

Hannah Guzik is a reporter for the Ashland Daily Tidings. She can be reached at 482-3456 ext. 226, or