The Newport City Council’s proposal to increase the lodging and restaurant taxes by 1 percent to help fund infrastructure improvements to city schools, is just the first step in trying to raise the millions of dollars needed to make schools safe for students, teachers, and employees.
City Manager Joseph Nicholson Jr. has promised that there are more proposals to come, including a possible admission tax to area attractions. Any tax increase would need legislative approval.
“It’s getting the support for revenue initiatives that the City Council comes up with that we don’t have our own autonomy to act,” said Nicholson.
“We’re looking at making pretty bold moves in the city that allow us to be successful in the long run,” said Mayor Jamie Bova, particularly focusing on education and the economy. “We have to be able to show we are committed to the schools, and that takes time and money.”
But local proposals are certainly not without controversy. While the city is asking for a 1 percent increase in lodging and restaurant taxes, so is the governor in her proposed budget. While the city specifically wants the funds used for local infrastructure improvements, such as schools, the governor wants the money for the beleaguered general fund.
The city has made this request to legislators in the past, but this year’s proposal differs because it would include all communities and specifically focus on local infrastructure improvements.
At their February 27th regular Council Meeting, Newport City Council voted 6-0 to approve – a Request to Legislative Delegation to Introduce Legislation to the RI General Assembly to amend RIGL 44-18-36.1 “Hotel Tax” and 5 -1 to approve ( Councilor Leonard opposed) Request to Legislative Delegation to Introduce Legislation to the RI General Assembly to amend RIGL 44-18-18.1, “Local Meals and Beverage Tax”. Councilor McLaughlin was absent from the meeting.
While Evan Smith, Discover Newport’s Executive Director, agrees with the city’s revenue needs, he’s concerned that statewide and locally, the focus is solely on increasing taxes or fees for lodging and meals.
“I’m supporting 100 percent the city’s needs to get revenue,” Smith said. But, he said, it’s about fairness. “The travel industry produces a lot of revenue…(we) need a fair and equitable balance. Keep an eye on the dashboard, try to keep it equal.”
While tourism taxes have focused on lodging and restaurants, Smith said there are segments of the industry that are not taxed. Among those, he said, are attractions, tours, ferries, recreation, and events.
“As part of this overall discussion the state and the city need to decide whether there shouldn’t be other people so there’s a level playing field, so that everybody is paying their fair share versus too high a burden on certain sectors of the industry that pay too high a tax,” Smith said.
“The dashboard for taxes and fees should rise at a relatively even pace for all segments,” Smith said. “Looking only to increase lodging and meals taxes without taxing other segments is a sensitive issue among industry partners.”
For the city, and likely cities and towns across Rhode Island, the issue is about the revenues.
While 1 percent for hotels and restaurants may not sound substantial, Smith said it would generate an additional $3 million in revenue.
The lodging tax in Rhode Island is 6 per cent, and the meals tax is 1 percent. That’s on top of the 7 per cent sales tax. Smith said the 13 percent lodging tax (sales tax, plus lodging tax) is 1 percent below the national average.
The bottom line is revenue, and while city officials are sympathetic to state needs, they believe there’s a critical need to take care of city needs.
“We’re just trying to figure out the paradigm, the financial paradigm,” Nicholson said.
Looming in the background is the Rhode Island Department of Education (RIDE) study that showed it would take more than $2.2 billion to bring Rhode Island’s schools to an acceptable level, and more than $600 million to make schools throughout the state safe.
The result was passage last fall of a $250 million bond to help cities and towns pay for the school improvements. That money is supposed to provide cities and towns with from 35 percent to 55 percent reimbursement, depending upon several factors. That money likely won’t go far. In Westerly, for instance, they’re talking about a possible bond issue of upwards of $70 million, and when debt serve is included that rises by another $40 million plus. In Newport, Nicholson said, they’ve used for illustration a figure of $100 million, plus debt service of at least $50 million.
Schools across the state were found to be in disrepair as a result of a failure to provide regular maintenance, much the same issue that has made the state’s bridges and roads among the worst nationally.
“The enemy of government is deferred maintenance when it comes down to it,” Nicholson said “But then again, it’s difficult with the resources you have to concentrate these resources on other things. The answer is to do a better job in maintenance.”
For Bova and Nicholson the city is at a crossroads, not only because of the condition of schools, primarily Rogers High School, which the state report identified as among the schools in worst condition, but also because of major economic development projects that are either underway or will be soon.
“I do believe in Newport, we’re at an infrastructure crossroads,” Bova said. “The infrastructure is so important to our economy you can’t ignore it. You can’t ignore the condition of Rogers High School. You can’t ignore the other things that go along with it.
“…The reality today is there are real issues that we can really define well in which the government needs the money, the residents need the money to support these initiatives.”