Government — Split into two increases, transient lodging tax will see a 3 percent hike

After years of discussion, the Newberg City Council has passed an ordinance increasing the transient lodging tax (TLT) to 9 percent.

Although originally proposed to take effect July 1 with a 3 percent increase, the council amended the proposal to implement the increase in two stages. The first 1.5-percent increase will begin Oct. 1, with the second increase slated for July 1, 2015.

Finance Director Janelle Nordyke said the change was largely due to requests from local business owners.

“It was a recommendation from a discussion with The Allison (Inn and Spa),” Nordyke said. “This is basically their recommendation.”by: SUBMITTED - File photo / Newberg Graphic
Creating revenue - The increased transient lodging tax will take effect in Newberg in two installments, the first increasing the tax to 7.5 percent Oct. 1. The Allison Inn (above), and other local hotels, motels and bed and breakfasts, will have to adjust their pricing to reflect the change.

While most councilors were on board with the delayed impact, Mike Corey questioned the reason for delaying much-needed revenue to the city.

“This has been discussed for probably two or three years. Basically everybody was in favor at that point (last year when the idea was discussed at length at a budget meeting),” Corey said. “That’s plenty of time for businesses to know about it. I’m disappointed, personally, to see it didn’t go to 3 percent July 1.”

Councilor Stephen McKinney was also in favor of the all-at-once approach previously discussed, but said he felt it was an appropriate compromise considering he didn’t feel the council focused enough on outreach to those businesses it will effect.

“A lot of the community was caught flat-footed,” McKinney said. “When push comes to shove they were unprepared, so I’m reluctant to support this tonight but I probably will because I think that since we didn’t exercise all the diligence we needed to do this, that this is maybe an OK way to get there.”

Although McKinney said the increase in the tax is typical, he added it may actually be too low.

“At present Newberg is at the low end of the spectrum, moving from 6 to 9 is normal,” he said. “I think the least amount of TLT we spent recently in Oregon (while traveling) has been 12 percent. The discussion probably won’t end here tonight.”

Once implemented, the increase will net an additional $51,405 for the city in fiscal year 2014-2015. The city currently receives $345,000 for the general fund from the tax. When it reaches the 9 percent level, estimated additional revenue will be $85,675 annually.

Under the city charter, 70 percent of the revenue collected must be used for tourism-related facilities, which includes the visitor center and tourism promotion performed by the Chehalem Valley Chamber of Commerce. The revenue estimates represent the 30 percent the city can flow into the general fund. The tax rate hasn’t increased since its initial inception in 1976.

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