In the first step, the City Council last month, on a 7-4 vote, approved raising the city’s local option hotel tax from 4 to 6 percent with the plan to steer the estimated $450,000 in annual revenue to economic development. Possible uses for the funding include new staff and a master plan spearheaded by the Marlborough Economic Development Corp.
City councilors will likely wrap up their end of the middle step at a meeting next month when they vote on sending a proposed home-rule petition to the Legislature. The City Council’s Legislative and Legal Affairs Committee last week supported the proposed measure that would create a special revenue fund for “business and economic development.”
“It’s just allowing this to be spent solely for economic development,” Council President Arthur Vigeant told the committee.
Vigeant said he has heard a range of times for when the Legislature might vote on the measure – from two months to the end of 2011.
“I’m hoping it’s non-controversial and it goes through quickly down there,” Vigeant said.
Regardless of the home-rule petition’s status, the tax will start Jan. 1. Marlborough should collect its first check – possibly about $80,000 – around the end of March for the quarter that runs through February, Vigeant said.
The money would go into the city’s general fund until the special fund is officially established.
In the meantime, Councilor Patricia Pope said she would support a resolution that states the council’s intention to use the revenue for economic development.
“We did this for economic development,” not for the general fund, Pope said.
The third and final step for the City Council is approving transfers, requested by the mayor, out of the special fund. Excess revenue not transferred out of the special fund would simply accumulate there.
Vigeant proposed the idea to increase the hotel tax with the ultimate goal of stabilizing the residential tax rate by earmarking the additional money for economic development and bringing new growth to the city.
The council will keep a close eye on how the city uses the funding and if it is meeting goals, Vigeant said.
Councilors have the option of removing the tax and the special fund, according to the proposed measure.
“If this thing just isn’t working, I absolutely hope to lead the charge to get rid of it,” Councilor Joseph Delano said. “I don’t think any of us wanted to enact a tax but I think almost all of us wanted economic development.”
This story originally appeared here