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North Andover

Rejected in June, meals tax hike back on North Andover agenda

The Casa Blanca restaurant in North Andover. Many of the town’s restaurant owners are opposed to a meals tax hike. The Casa Blanca restaurant in North Andover. Many of the town’s restaurant owners are opposed to a meals tax hike. (JOSH REYNOLDS FOR THE BOSTON GLOBE)
By Katheleen Conti
Globe Staff / November 10, 2011

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For the second time in five months, North Andover voters are being asked to decide whether to become the next community to adopt a local meals tax.

The optional measure, which would raise the 6.25 percent state sales tax by 0.75 percent on prepared foods and meals, was hotly debated at the annual Town Meeting in June, and ultimately defeated by seven votes.

Mark Rodgers, who was chairman of the town’s volunteer finance committee in June but has since stepped down because of time constraints, gathered 185 signatures to bring the petition back to the voters at next Tuesday’s Special Town Meeting.

Opponents, many of whom expected the measure would be back at next year’s annual Town Meeting, have been critical that the petition is before voters a mere five months after its defeat, and that it is being heard at a Special Town Meeting, which historically has a lower attendance.

For Rodgers, the timing is right because, if adopted now, it would allow town officials to see how much new revenue would be generated by the meals tax at the same time that they would be working on next fiscal year’s budget. He said if adopted, it would be implemented by January.

“It would permit the town to accurately budget for the next fiscal year,’’ said Rodgers, who served on the finance committee for five years. “There’s no sign of increasing revenues anywhere. What we’re looking to do is have recurring revenues that we can rely on and then base services around them.’’

According to state Department of Revenue estimates, North Andover would have made approximately $428,000 in meals tax revenue last fiscal year. Rodgers said that the state’s projections are about 95 percent accurate among communities that have adopted the meals tax, but to be on the safe side, North Andover should calculate projected revenues at 80 percent of what the state estimates, or somewhere between $331,000 and $340,000. Any revenue would go to the town’s general fund.

“Very few communities have collected less than 80 percent of the Department of Revenue estimate,’’ Rodgers said. “It adds to the mounting evidence that there’s no adverse impact to passing this tax.’’

Phil DeCologero, who is on the executive board of the North Andover Merchants Association’s board of directors, said that introducing a meals tax at a time when the popularity of North Andover’s dining scene is on the rise could threaten the chances of more restaurants and businesses coming to town.

“It’s about branding. If we’re able to push the theme that North Andover has lower taxes, even if just by a fraction of a percentage, that goes a long way,’’ DeCologero said. “The benefits are that we’ll be bringing more businesses to town and then they’ll pay commercial property tax rates. [Meals tax] revenue is more volatile - when two or three restaurants could go out of business, that impacts the bottom line.’’

DeCologero was also critical of the timing of the petition, saying that the town is in the middle of a fiscal year and is not facing midyear cuts.

“Why not bring it up next year when it’s more germane to the budget discussion?’’ he asked, adding that many restaurant owners oppose it, but are concerned about coming forward publicly. “Right now, what the meals tax does is cut into the existing pie. The North Andover Merchants association wants to grow the pie.’’

When the state’s sales tax was hiked from 5 to 6.25 percent in 2009, Lesley Carlson, owner and manager at Rolf’s Pub, refused to pass the cost increase to her customers, particularly the regulars, whom she describes as “blue collar third-shifters.’’

“It’s still very much a pay-as-you-go place. Two years ago was the first time we started taking credit cards,’’ said Carlson, who’s been at the helm of the 65-year-old bar since 2000. “Everything’s always been a round number. Beers are $3, not $3-and-some-cents. . . . Any added tax onto us, including our inspection fees and licenses fees, anything that increases our prices makes us less competitive.’’

If the meals tax is approved, Carlson said she doesn’t think she’ll be able to absorb the additional cost.

“I think that I would definitely have to raise my prices,’’ Carlson said. “I don’t think I would pass the entire tax onto consumers.’’

The issue has even split the four-member Board of Selectmen, with Donald B. Stewart and William F. Gordon voting Monday to recommend the article to voters, and Rosemary Connelly Smedile and chairwoman Tracy M. Watson voting for an unfavorable recommendation.

Connelly Smedile said she has heard the argument from proponents of the meals tax, which would add 75 cents to a $100 dining bill, that the average weekly cost would be equal to that of a cup of coffee.

“Well, people are drowning in cups of coffee. This is a bad economy,’’ she said. “The real problem is that we need to learn to live within our means. . . . We don’t need to be raising taxes on just one type of business and ask them to foot the bill for things that we need.’’

Gordon said he has talked to restaurant owners, but said that the benefits of the meals tax outweigh the concerns.

“It’s not an easy decision, but knowing both sides of the issue, the town could use the additional revenue. I think it’s a minimal impact on people’s discretionary income,’’ Gordon said. “When it comes to taxes, we’re all sensitive to those issues, but when you dig more into it, it’s a bang for the buck, I think.’’

Because this is a “touchy issue,’’ Rodgers said, he expects another uphill battle Tuesday, but with no foreseeable hike in state aid and continued increases in health insurance costs, the meals tax would “slow down the decline of town services.’’

“I don’t think this is harmful at all,’’ he said. “One could make the argument that this is a community-minded thing to do. If I thought it had a negative impact on restaurants, I would take pause and not support it. But there’s no evidence whatsoever to support that.’’

Katheleen Conti can be reached at kconti@globe.com. Follow her on Twitter @GlobeKConti.