Restaurant owners talk operating during pandemic restrictions

Cannon Beach hardware & Public House in Cannon Beach.

The Cannon Beach City Council is scheduled to vote on a resolution Aug. 3 that would put before the voters on Nov. 2 a question whether to impose a food tax.

The city of Cannon Beach has talked about using this food tax to fund a new city hall and improvements to the police station as well as to help the Cannon Beach Rural Fire Protection District with its budget shortfalls.

Cannon Beach is not the first city in Oregon to consider and impose a food tax. Currently Yachats and Ashland have such a tax. The city of Newport is holding a public hearing on Monday about whether to put a 5 percent food and beverage tax before the voters on November 2nd. The vote on the resolution could happen that night.

In the early 1990s, the voters of the city of Ashland approved a 1 percent food and beverage tax, according Adam Hanks, Ashland’s city manager.

The revenue from that tax has gone to parks and land acquisition, Hanks said. The ordinance allowed the council to increase the tax over time, which it did to 5 percent. The other four percent went to debt service on the waste treatment plant.

He said the city revised the ordinance two other times. Ashland still has that tax in effect for another nine years.

Whether Ashland’s tax impacts its local restaurants’ business may be colored by the fact that a number of their customers are from California, where a food tax already exists, he said. Customers may not be surprised to see the tax in Ashland.

As a revenue stream, the revenues from the food and beverage tax were “down drastically” during the pandemic when restaurants could only sell takeout, he said. To use this as a revenue stream for a fire district could be “risky.”

He also said the city of Ashland asked the voters to rebuild its old city hall at a cost of $7 million and that was defeated.

“Many communities in Oregon are struggling with finding adequate revenue streams to fund public safety,” he said.

Julie Akins, mayor of Ashland, said the reason, in part, why the food and beverage tax has not had as negative an impact on the restaurants may be that a number of Ashland restaurants are “well known” and people are willing to pay more to have that experience.

A group of citizens put a food and beverage tax on the ballot two years ago to be imposed in the city of Jacksonville, said Stacey Bray, city finance director. The tax was defeated.

The city of Newport hired Rick Osborn, principal of Blue Ridge Strategies, LLC, a consulting firm, to work with them before voting to put this question to the voters.

Newport City Manager Spencer Nebel said Newport formed a citizens’ finance group that looked for three years “at a number of options to generate sufficient revenues to meet the (city’s) needs.” The group ultimately decided it was a fairness issue to defray some of the costs of the tourists who use the city streets and services by imposing a food and beverage tax. They also looked to Yachats and Ashland where such a tax is working.

The revenues from the Newport tax, should the voters approve it, would pay for the addition of positions to the library and the public safety and fire departments and for improvements to park buildings, such as a recreation and aquatic center.

Osborn said the imposition of taxes is “always going to be a fairness issue.” Each community needs to look at its own dynamics.

As published in a previous story by The Gazette, Tom Lauritzen, temporary accountant for the city of Yachats, said their food and beverage tax has been in effect since 2006.

“The effect of the tax (on volume of business) has been “virtually non-existent.” However, the closest city is nine miles away, Waldport, which was “not known for their restaurants at that time.” The next closest city is Florence 25 miles away, which is a long drive to save a 5 percent tax.

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