CITY HALL — Burbank residents could be asked to vote on codifying a utility tax that brings the city $20 million a year — a move cities like Glendale and Pasadena have already made to protect themselves against lawsuits from telecommunications companies.
The 7% tax on telecommunications, electricity and natural gas generates $20 million per year, and is the third-largest revenue source for the General Fund.
Unlike many other cities, Burbank does not charge a utility tax on cable television, water or sewer services. The measure, slated to be on the ballot next year, would simply codify the utility tax and protect it from challenges from the telecommunications industry.
“It is important to note this is not a tax increase, but merely securing our existing revenue,” said Patrick Flynn, the city’s revenue manager.
The ballot measure would parallel a move by hotel owners, who are considering taxing themselves to support marketing Burbank as a destination hub and capitalize on travelers using Bob Hope Airport.
Despite garnering early support from nearly all the city’s major hotels, with the exception of the Burbank Airport Marriott Hotel and Convention Center, the question of who would control the funds remains up in the air, City Manager Mike Flad said.
Hotel officials would not comment this week, saying that plans were in the early stages.
With nearly 60 regions in California operating under similar agreements, proponents argue that local hotels could lose significant ground by passing up the chance to coordinate marketing efforts.
But opponents contend that given the protracted recession, now is not the time to be assessing additional fees.
Still, the city could see broad benefits if hotels lowered vacancy rates — mostly by marketing themselves against competitors in Glendale, Pasadena and Los Angeles, Flad said.
“The theory is you take the money, you reinvest it into your hotel industry, you increase the number of folks that are staying at your hotels [and] you decrease your vacancy rates,” he said.
A 1% self-assessment for hotels within the so-called tourism-based improvement district would generate $500,000 annually to promote the city, Flynn said.
The hotels would be “really driving the policy decisions in terms of, they know their business, they know what drives customers, and they would have a better handle on trying to drive customers to the hotels,” Flad said.
Voters could also be asked to consider new or increased taxes on hotel parking and rooms.
A 1% hotel bed-tax-rate bump would drive revenue by $500,000. Officials could also try to bump up a 12% parking tax that has been in place since 2005.
A 1% increase there could bring in an additional $215,000 annually to the General Fund.
Hotel owners would also be more inclined to back a proposal that funded business marketing rather than schools and libraries, Flad said.
“I know the Marriott was resistant, but maybe they won’t be if it’s packaged in a way that’s attractive to them,” Mayor Anja Reinke said. “It’s pretty low-cost, and if it drives the economy I am in favor of it.”
But Councilman David Gordon expressed some concern with how the proposals would affect smaller hotels.
“I am paying $1,000 extra a year on my property tax so that we can have some flowers and trees between the sidewalk. It’s not helping my business at all,” said Gordon, an optometrist. “I am not worried about the big hotels. They have national marketing; they’re all over the Internet. I am worried about the smaller ones, of which we have a number.”