With a focus on the future of Dedham’s infrastructure, Selectmen Chairman Michael Butler pitched a plan this week to set aside revenue generated by a possible hike to hotel and meals taxes in the town.
In November, special Town Meeting could vote to increase Dedham’s hotel tax from 4 percent to 6 percent, and its meals tax from 6.25 percent to 7 percent. Butler said the additional hotel tax could generate anywhere from $132,000 to $371,000 each year for Dedham, while the meals tax could bring in $200,000 to $300,000 annually, though the latter estimate is less certain.
Butler suggested this week setting aside those revenues in a “facilities stabilization fund” that would pay for new town buildings, or major capital improvements to existing ones.
He also proposed taking the existing 4 percent hotel tax money – now used for Dedham’s operating budget – and incrementally shifting it toward the new facilities stabilization fund, beginning in fiscal 2012. That more daring move drew criticism from one audience member at last Monday’s meeting of town government leaders at Dedham Middle School, who said it would “robbing Peter to pay Paul.”
Referring to the new Master Plan, Butler said that for several decades the town shied away from borrowing funds, and many important public buildings suffered as a result. He said the town has an infrastructure gap because “we really haven’t replaced any buildings, other than this one, for many, many years.”
There are 14 major buildings in town, including eight schools. Even if every building lasted a century, a new structure would need to be put up every 7 years, Butler said, but there is nothing in place “to sustain investments in major capital improvements to replace the buildings.” The new facilities fund would address that, if it were created by special Town Meeting. Butler said the fund would only go toward capital projects – such as new buildings or improvements like adding a new wing – and would not be used for normal ongoing maintenance like boilers.
Amid a continuing fiscal crunch, the state recently gave towns the ability to up their hotel and meals taxes. Boston adopted both on Aug. 26. Butler said Canton and Westwood are taking no action until the spring, while Norwood could adopt the hotel tax at its special Town Meeting next month.
Dedham currently receives none of the money from the state’s 6.25 percent meals tax, but it would get whatever money is generated from the 0.75 percent increase. It is difficult to determine what Dedham would get from the increased meals tax, because of the way the state has calculated its meals tax collections until now, Butler said. Still, Butler said the state Department of Revenue estimates that Dedham would get $243,792 from its existing base – and that figure does not include Legacy Place, which boosts the town’s restaurant seating capacity by 50 percent.
Dedham will continue to keep all of the 4 percent hotel tax money it charges – a figure that has ranged from $528,510 in fiscal 2004 to $741,453 in fiscal 2008.
In all – depending on whether it adopts the new taxes – Dedham could eventually collect between $548,000 and $1.3 million in annual revenues generated from hotel and meals taxes, Butler said.
Saying that fiscal 2011 will also be trying, Butler proposed gradually shifting the existing hotel room revenues from operating expenses to the new facilities fund beginning the following year, in fiscal 2012. One percent would be shifted that year, followed by 2 percent in fiscal 2013, 3 percent in fiscal 2014, and so on. Over time the amount of money devoted to the fund would grow, and “incremental adjustments” would be made to the operating budget for the $150,000 or so being taken from there each year, Butler said.
Michael Humphrey, the Precinct 5 district chairman, said he would hate to see any money taken from operating expenses.
“You’re basically robbing Peter to pay Paul. We should only base this stabilization fund on what we can count on, and the increases of $132,000 and $200,000, not close to $1.3 million stepped up through time,” Humphrey said. “You’re just shifting burden from one place to another.”
Said Finance Committee member Derek Moulton: “I just have a problem with charging more taxes, regardless of what it’s going to go to.”
Selectman Carmen DelloIacono said that he definitely supported using the new 2 percent hotel and 0.75 percent meals taxes for the facilities fund, offsetting the need for debt-exclusion tax increases – much like he proposed in 2007. He said the new stream of revenue “definitely should be earmarked to offset debt exclusions in the future.”
DelloIacono said he has not committed to using the existing 4 percent hotel tax for the fund, but is open-minded on that.
Butler said that next a working group would be pulled together to craft the final proposal that will be presented to the Finance Committee and the full Board of Selectmen, leading up to special Town Meeting.
Xeno Sountoulidis, whose family runs the Greek eatery Kouzina Estiatorio in Dedham Square, said now is “not the best time to raise taxes,” but he doesn’t think a higher meals tax will affect his business, either.
“I think people still want to go out. They still want to treat themselves every once in a while, so they don’t feel as if they’re in the worst recession we’ve ever seen,” he said.
Ricky Lee, the manager of Kiku Yama Teppanyaki Steak House in the Square, had a harsher take. He said it would be one thing if the state upped the meals tax across Massachusetts, but detrimental for Dedham to do it.
“It’s going to stop people from coming to town and spending money,” Lee said. “It’s a bad move.”
Dedham Transcript staff writer Edward B. Colby can be reached at 781-433-8336 or ecolby@cnc.com.
