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Measure would add $965,000 to coffers

A proposed increase in the city's hotel room tax would, if approved by council and voters, reduce budget pressures.

September 16, 2006|By Chris Wiebe

CITY HALL — An ordinance proposing an increase in the tax that hotels collect from customers based on room rates may be headed for April's general election ballot.

The council voted 4 to 1 on Tuesday, with Councilman David Gordon opposing, to move forward with a draft of an ordinance that would put the increase on the ballot. If approved, the measure raise the transient occupancy tax from 10% to to 12%. A simple majority vote is required to approve general-purpose taxes.

The increase, which would raise an estimated $965,000, would help alleviate recent budget shortfalls, especially in light of 2006-07 fiscal year budget cuts, which marked the fourth consecutive year of cuts, Financial Services Director Bob Torrez said.

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"General funds as a result of ongoing budget cuts are lean and mean in my opinion," he said. "Additional resources are needed to offset projected operating deficits and to continue to maintain the city in the proud tradition that the citizens of Burbank demand."

But city officials should be cautious about raising the tax because of the potential negative effects on hotels in Burbank, Burbank Chamber of Commerce Executive Director Gary Olson told the council.

"Our hotels are currently thriving and prosperous, but our [chamber] members tell us that historically their business is cyclical within their industry," he said. "It is our hope that your decision tonight will be to go with a modest increase to keep them competitive as possible."

Other cities, such as Dallas, have experienced declines in occupancy rates as a result of increased taxes, he added. Pyramid Advisors, which recently purchased the Hilton Burbank Airport & Convention Center, expects to book about 10,000 rooms this year to groups, Olson said.

"But [Pyramid officials] are concerned that media planners could choose to go elsewhere if our rate becomes too high in comparison to other cities in our immediate area, most notably Glendale, where their Glendale Hilton will have an advantage with their 10% [transient occupancy tax] rate."

The chamber recommended that if the council decides to put an increase on the ballot, it should be no higher than 11.1%, Olson said.

Some members of the council favored the 12% increase to put rates closer to those in other cities, especially those that have airports.

"A transient occupancy tax is charged to visitors, and I think that's something that is palatable and something that's necessary," Councilwoman Marsha Ramos said. "I wouldn't support a 14% increase, but based on what other cities are obtaining that have airports, I think that 12% makes sense."

Increased revenues from the tax would help bolster the general fund and mitigate possible losses in city funding as a result of new state and federal legislation that could draw money from the city, said Councilman Dave Golonski, who indicated a shift in his position at Tuesday's meeting.

"I realize that we need additional general-fund resources and we also have some potential challenges in the utility users tax in particular," he said "So I think it's prudent for us to do this."

Elsewhere in the state, Pasadena imposes a 12.1% transient occupancy tax, Torrez said. Glendale, Irvine and San Bernardino have a 10% tax, he added.

The average tax imposed by cities with airports is 12.5%, he said.

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