“It was sold on the idea that it’s other people’s money, so it’s quite easy to say you’re in favor of taxing people coming from out of town or out of state,” Milford Town Administrator Louis Celozzi said of a vote by special Town Meeting in October to increase the tax from 4 to 6 percent. “It’s extra money for the town coffers and a pretty easy sell.”
Milford has become one of the last local communities to adopt the 6 percent tax, according to state Department of Revenue Statistics.
In 2009, lawmakers began allowing cities and towns to increase the hotel tax from 4 to 6 percent. Also that year, lawmakers approved a 0.75-percent local option meals tax, giving communities two opportunities for new revenue in the midst of a tough recession, said John Robertson, deputy legislative director for the Massachusetts Municipal Association.
“This recession has been really hard on cities and towns and it has lasted a long time,” said Robertson, who lives in Mendon. “Every community has budget problems and I think that’s certainly the main reason they’re looking at those two revenue sources.”
In Southborough the town has adopted the maximum tax in the hopes of easing the strains on the municipal budget, Town Administrator Jean Kitchen said.
“We were looking for any revenue source possible and that was one that perhaps would not hurt as much,” Kitchen said. “It’s just a little extra money to offset all the reductions we’re having to make.”
The 6 percent rate went into effect July 1. Kitchen said the revenue will go into the town’s general fund, an approach Robertson said many communities take.
Leaders of the Milford Area and MetroWest chambers of commerce said they have not noticed major economic effects from the hotel tax.
“I think anytime we hear about increased taxes it concerns the business community,” said Barry Feingold, president and CEO of Milford’s chamber. “I think the hotels in this town realize surrounding towns have (a 6 percent tax) as well. We’re always looking for a level playing field.”
Steve Gordon, general manager of the Doubletree Hotel in Milford, said many of the hotel’s guests come from overseas or New York City and California and are used to comparable or higher room occupancy taxes.
Bonnie Biocchi, president and CEO of the MetroWest chamber, said she hopes towns dedicate money from the tax to economic development and other activities that benefit businesses.
Marlborough has taken that approach, directing revenue earned by increasing the tax from 4 to 6 percent into an economic development account that funds work on a master plan and efforts to reach out to businesses that may be interested in the city’s industrial park, City Council President and Mayor-elect Arthur Vigeant said.
“We had the support of all but one or two of the hotels when we started,” Vigeant said. “Now that they know it’s going to economic development, I think they see the benefits from it.”
Natick has also dedicated revenue to buying police cars, renovating town buildings and replacing streetlights, Selectman Josh Ostroff said.
“That money has really helped us to move a backlog of capital projects,” Ostroff said.
In Northborough, one of the few towns with hotels that has not gone to a 6 percent tax, town leaders haven’t seen a financial need for increasing the tax, said Elaine Kelly, chairwoman of the town’s Appropriations Committee.
“It’s not pressing,” Kelly said. “As much as people feel that we impose taxes, we really try to keep them down as low as we can.”
Milford Selectman Brian Murray, who opposed raising the hotel tax, agreed with Kelly’s reasoning.
“I just didn’t think the town had the need for the revenue,” Murray said. “Although it’s a small amount, it’s just another cost that’s going to get passed on to businesses or consumers.”
Celozzi, Milford’s town administrator, said money earned this fiscal year will go to the town’s general fund and likely become free cash. But the new revenue – estimated at $200,000 per year – can be factored into next year’s budget.
Selectmen Chairman Dino DeBartolomeis said the additional revenue could support teaching or police jobs or offset the tax rate.
“I think it’s a really good way of generating revenue without adversely affecting the taxpayer,” he said.
This story originally appeared here