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Pros, cons of meals tax debated at forum

A crowd at Southern Oregon University heard the pros and cons of renewing Ashland's 5 percent sales tax on prepared food and beverages Wednesday during a public forum sponsored by the Ashland Chamber of Commerce and SOU.

The Chamber's members are divided on the meals tax's renewal and the organization has not taken a position on the issue.

Standing Stone Brewing Company Co-owner and former Ashland City Councilor Alex Amarotico, former Ashland Mayor Cathy Shaw and former Ashland School District Board member Chuck Keil explained why they thought the tax should be renewed.

Ashland Springs Hotel General Manager Don Anway and Liquid Assets Wine Bar Co-owner Denise Daehler represented opponents of the tax's renewal during a panel discussion.

Voters will decide on the Nov. 4 ballot whether to renew the tax, which was first passed in 1993. The tax is used to make debt payments on past environmental upgrades to the city's sewage treatment plant and to buy park land.

If it's not renewed, the tax sunsets in December 2010. Voters are being asked whether they want to renew the tax until 2030. Revenues would be used to continue making sewage debt payments and to pay for more improvements to meet tightening Oregon Department of Environmental Quality standards. Rather than only being used for park land purchases, meals tax revenues could also be used for park development and rehabilitation.

Shaw said a building boom in the 1980s caused residents to worry that land would be gobbled up for development, with little left over for parks and open space. Voters approved an open space plan that listed areas they wanted the city to acquire for parks, trails and open space in 1990, but there was no funding.

In 1993, voters adopted a 1 percent meals tax to fund park purchases. The City Council increased the tax by another 4 percent to pay for expected sewage treatment upgrades.

To meet DEQ requirements not to dump phosphorus-laden treated sewage water into Bear Creek, the city had the option of sending Ashland's sewage to Medford for treatment, sprinkling the water on a hillside across Interstate 5 from Ashland or paying to upgrade Ashland's sewage treatment plant — the most expensive option. Sending the sewage to Medford would have been the cheapest option, but that also would have meant treated sewer water was no longer being dumped into the creek to supplement flows for fish.

As mayor, Shaw advocated the sprinkling plan, but a City Council majority voted years ago to upgrade the sewage plant.

The ultimate cost for the upgrade, including interest, will be about $46 million, Shaw said.

The city has yet to meet DEQ requirements to cool the treated sewage water that empties into the creek, which could cost still more.

Although the debt for the past upgrades will be paid off in 2022, the current City Council decided in July to ask voters to extend the tax to 2030 because of the coming sewer expenses, which are still unknown.

Without the tax's renewal, the Ashland Finance Department has estimated that sewage bills would go up by 60 percent, costing the typical household an extra $10 per month.

Having the meals tax is a way to get tourists to help pay for sewage service and parks, which they use when they come to Ashland, Shaw said.

She said tourists come for the entire Ashland experience, which includes parks, theater and restaurants. Without the tax, the town would not have the parks, open spaces and trails it has now.

"What's good for Ashland is good for Ashland's businesses," Shaw said.

Since its inception, the tax has generated $25.7 million. Of that, $19.5 million went for sewage debt payments, $4.9 million went to buy park land, and restaurants got to keep $1.3 million for their efforts in collecting the tax from customers.

Amarotico, the Standing Stone co-owner and former City Councilor, said he favors the tax's renewal. He said he saw first-hand as a councilor how important the meals tax receipts were as he went through the city budgeting process each year.

He said his restaurant has 13,823 customer comments in its records, and only 13 mention the meals tax. The business would pay higher sewer bills and lose the portion of money it keeps for collecting the tax if it's not renewed.

The tax also helps Standing Stone's servers earn higher tips because customers tip on their total bills, including the meals tax. That equals about an extra $1,000 in tips each year for each server, Amarotico said.

Keil, the former school board member, said 109 businesses were collecting the tax in 1993, compared to 131 this year. That shows the tax has not hurt business growth, he said.

Restaurants, grocery store delis, coffee shops and convenience stores are among the businesses that collect the tax.

In arguing that the tax causes restaurants to fail, opponents have said that only 55 of 79 restaurants that were open in 1993 are still here today.

But Keil said that's actually a good survival rate, since the Bureau of Labor Statistics shows the four-year survival rate for restaurants nation-wide is only 44 percent.

Speaking for opponents of the tax's renewal, Anway, the general manager for the Ashland Springs Hotel, said large groups choose to stay and dine in surrounding towns to avoid the meals tax.

As an example of the revenue that is lost if one group chooses another town, Anway showed the bill of a recent large group that bought 15 rooms for three nights. The group spent $7,155 on the rooms, $643.95 for the city's lodging tax, $564 for dinner and $28.20 on city meal taxes.

Anway showed a letter from a couple in Medford who said they seldom eat in Ashland since the meals tax was adopted in 1993. Guests at Ashland Springs Hotel's on-site restaurant are sometimes surprised and angered when they see the meals tax on their bills, he said.

"If you make one person mad, they tell 10 other people," Anway said, referring to the business adage about how customers share their negative opinions.

The meals tax affects tourists, but also working people in Ashland, senior citizens and SOU students who are so busy working and studying that they frequently buy prepared food and beverages, Anway said.

He pointed out that the Ashland Food Cooperative, a grocery store with a deli that serves prepared food and drinks, is the single largest payer of the meals tax.

Daehler, the co-owner of the wine bar, said that times are different now than when the meals tax was first adopted. Unemployment is high and many people who still have jobs are having their hours cut and their benefits reduced. Additionally, Medford has added hotels, making it an even stronger competitor against Ashland.

"This is a different time than 1993," she said.

Daehler said when voting, residents need to think beyond the extra $10 they will pay each month on their sewer bills and think about what's best for the entire community.

"This sales tax causes a lot of turmoil in this town," she said.

The meals tax forum was taped and will be broadcast many times over the next few weeks on Ashland TV channel 20.

Other public forums on the meals tax are planned, including a Rotary forum at noon on Oct. 15 at the First Methodist Church, 165 N. Main St., and a League of Women Voters forum at 1 p.m. on Oct. 17 in the SOU Stevenson Union building.

Staff writer Vickie Aldous can be reached at 479-8199 or vlaldous@yahoo.com.