Morro Bay delays decision on tax hike

Protests by hoteliers and other tourism businesses prompted the Morro Bay City Council on Monday to postpone to late January a decision on whether to place a measure on the June ballot raising the tax on hotel rooms.

Mayor Janice Peters said postponing the decision to Jan. 25 will give the council more time to get community reaction and look into other options. The proposed ballot measure would raise the transient occupancy tax from 10 percent to 12 percent.

Restaurateurs and other tourism business owners lined up at Monday’s council meeting to speak against raising the tax given the tough economic times. The recession is causing hotels in cities such as Sacramento and Las Vegas to slash rates to as low as $7 a night to attract business.

Several hoteliers said they would have to cut back on services and amenities to make up for any tax increase. They encouraged the council to give the city’s business improvement district — which collects its own 3 percent TOT to be used for advertising and promotions — a chance to work.

“I think that if we give the BID a chance to work, we’ll see a turnaround fairly soon,” Chamber of Commerce president Peter Candela said.

While all cities have experienced budget reductions, Morro Bay’s shortfalls are particularly acute because its traditional sources of income — tourism and commercial fishing — have decreased dramatically. Tourism rates are even lower than they were immediately following the Sept. 11 terrorist attacks, business owners said.

Transient occupancy taxes are collected on lodgers who stay less than 30 days. It accounts for 18 percent of the city’s funding.

Reach David Sneed at 781-7930.