When Half Moon Bay, in the midst of selling bonds to pay off the debt to Charles “Chop” Keenan last summer, released its budget some observers were perplexed.
The budget, released while the county was mired in recession and with industry reports commonly citing high hotel vacancy rates, with news reports of sharp cutbacks in business and personal travel, with builders stopping construction of developments half finished, and with home owners crying out for property tax reassessments in light of the decreased values of their homes, reassured citizens that all was well.
No, there would be no decrease in the cherished “TOT”–the transit occupancy tax, commonly called the “hotel tax”–which forms the foundation of city revenues at about a third of the budget. No, there would be no decrease from the year before. In fact, there would be an increase in tax revenues from TOT–a record increase.
Take that, doom and gloom economists.
Fees from developers would shoot upward as well. Development on the coast isn’t the same as development in the Central Valley, after all.
Take that, naysayers.
Property and sales taxes? Oh, well, yes, obviously they would be affected as voters could plainly see for themselves. Property taxes would increase still, of course, albeit at a slower rate. Sales taxes would take a hit as demonstrated by the empty storefronts downtown.
Take that, you worry-warts.
Ahh, but what a difference a half year makes. Those election-year, rosy budget projections may have helped keep the powers-that-be the powers-that-be in Half Moon Bay but even the Godmother herself wouldn’t have been able to fight one of the greatest powers of all– arithmetic.
The numbers didn’t add up back in June and they surely do not add up now in February.
The budget passed by the HMB City Council looked forward to a total revenue stream of $11.2 million, barely enough to cover expenses, including the $1.5 million bond payment, according to city manager Dolder..
But that was before the real budget numbers came in. Sales tax off 21% from the year before–a two hundred and twelve thousand dollar hole in the budget. The property tax shortfall takes away another quarter million. Those builders? They are not building. Zap another half million.
The real kicker is the hotel tax. That record increase has melted away to a record decrease–instead of a 14.5% increase over the prior year, during the worst recession since the 1930s–the city found that TOT decreased by a record 9.6%. That’s a difference of almost $850,000.
Point-eight-five million here, point-eight-five million there–pretty soon you’re talking about real money.
With all the new numbers computed the city is $2.1 million off–almost 20%–from where it said it would be six months ago.