In their meeting Tuesday night, Ashland City Council members will vote on the language of an ordinance to change the food and beverage tax, if approved by voters.
The council is trying to change the food and beverage tax again after a proposal to put the money in the general fund failed last November.
Ashland approved the tax in the early 1990s, as a way to buy more land for parks. The present day 5% tax has expanded to pay off debts for its wastewater treatment plant and for street repairs.
The tax currently nets around $2-3 million in revenue every year.
Ashland Mayor Tonya Graham said the parks department is the right place for the money because it can pivot quickly when unexpected events draw down tax revenue.
“We saw that in the pandemic,” she said. “The food and beverage tax dropped quickly, but also we were adjusting our recreation services at the same time.”
Graham said the city will be adjusting how much money is allocated to the parks department from the general fund based on how much it gets from the tax.
Street repairs
Some of those opposed to the change are concerned about getting rid of funding for major street improvement projects.
Graham said it’s hard to get loans for those big projects when the tax that pays for them is unreliable, like pandemic restaurant closures.
“We need to make sure that we can tell them that we have a secure funding source for the debt payment,” she said.
Graham said the city already moved funding for street projects to a tax on utilities, such as water, power and internet.
Others argue the change will allow the parks department to use funds for major construction projects – such as a new pool – rather than cleaning up and fixing the city’s existing parks.
25% of the food and beverage tax is currently reserved specifically for parks capital projects, including major building construction, land acquisition and repair.
If the measure passes, the department could use all of the funding for capital projects if desired, but the 25% minimum remains. Graham said they decided to keep that percentage split because large capital projects often require financing, or loans.
If lenders know that at least a quarter of the food and beverage tax will always be available to pay back debt, Graham said they’ll be more likely to approve new loans.
Extending the tax
Included in the measure is an extension of the food and beverage tax for an additional 10 years. The tax would expire at the end of 2040, if approved.
Graham said that’s also for capital project planning. It’s easier to plan and pay for large projects with 17 years instead of 7, she said.
That timeline extension has also received some criticism from opponents, who say giving the parks department the funding for another 17 years restricts the city’s ability to make adjustments as it faces an uncertain financial future.
Ballots head out to Ashland voters at the end of April, and are due back by May 16.
