Impartial Analysis of Measure O

Alan J. Smith, City Attorney

Article 3 of Chapter 6 of Title 3 of the Watsonville Municipal Code levies a 11% transient occupancy tax on each hotel or motel guest in the City. This ballot measure, if approved by City voters, would increase Watsonville’s transient occupancy tax from 11% to 12% of the room rent charged by the hotel or motel operator.

The City Council voted to approve the proposed tax but it can only go into effect if approved by a majority of voters (1 more than 50%) at the November 6, 2018, election. This Transient Occupancy Tax is a general tax meaning that all tax revenue is deposited in the City's General Fund and is available to pay for the costs of all City operations and programs including police and fire protection, parks and recreation programs, economic and employment development, and essential City services. This ballot measure therefore proposes a "general tax" rather than a "special tax" and requires a simple majority (1 more than 50% of those voting) to pass.

Many hotel/motel guests are tourists or City visitors. Therefore, much of the increased tax revenue from this measure, if adopted by the voters, would come from non-City residents. Revenue will pay for municipal services to these visitors while here and to City residents.

A “Yes” vote will increase the tax from 11% to 12%. A “No” vote will leave the tax unchanged at 11%.

The above statement is an impartial analysis of the proposed Transient Occupancy Tax Increase Ordinance.