Hotel, meal tax may provide relief
By John Swinconeck, Contributing Writer
Northborough – There's an “800-pound gorilla in the room,” according to Northborough Town Administrator John W. Coderre, and the best way to tame it is with a town tax on hotels and meals. During the Board of Selectmen's March 25 meeting, the board agreed with Coderre and voted to include a tax proposal on the Annual Town Meeting (ATM) warrant.
The aforementioned gorilla is the town's $24 million liability for Other Post-Employment Benefits (OPEB). According to Coderre, there are two ways to pay for it: an increase in property tax, or an additional meals and hotel tax.
“We’re looking forward and planning,” Coderre said.
OPEB refers to benefits the town is mandated to pay its retired employees. Rising health care costs in recent years has reportedly increased the liability for OPEB to $16.6 million statewide.
Coderre said property taxes could be raised without an override. However, he said the hotel and meal tax might also provide relief to homeowners. Under the proposed budget, the average single-family household will pay $145 in property taxes, a 2.3 percent increase over the current fiscal year. If Town Meeting voters pass the hotels and meals tax, that figure could be reduced by $35 to $110.
Article 27 in the warrant would impose a .75 local sales tax on restaurant meals, on top of the 6.25 percent state sales tax.
Article 28 would increase the local tax on hotels from 4 percent to 6 percent.
“People are scoffing” at the two tax proposals, Selectman Aaron Hutchins said, but added that the town was faced with “a major funding liability” in the form of OPEB.
“OPEB is coming, people, so beware,” he said.
The total proposed budget under the warrant is a little more than $51.8 million, a 4 percent or $2 million increase over the current fiscal year. Fifty-nine percent of the budget consists of school funding.
“This is roughly what we had last year and the year before,” Coderre said, who noted that the end of construction at Northborough Crossing and Avalon Bay apartment complex is coming to an end, meaning growth in town is returning to previous levels.
Those projects helped the town keep its average property tax increase to $189 for the past three years combined.
Coderre said the proposed budget has “no grand changes in the level of services or levels of staffing.”
Town Meeting will be held Monday April 22 at 7:30 p.m. at Algonquin Regional High School.
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