Tourists big depositors in city’s bank account

This article first appeared in the Monday, June 5, 1989 edition of the “Ojai Valley News” on Page A-1. It is reprinted here with their permission. The author is unknown.

Tourists big depositors in city’s bank account

Like it or not, Ojai is a tourist town and the city is becoming more and more dependent on the taxes visitors pay.

City Manager Andy Belknap, who has prepared the tentative budget for 1989-90, said three revenue sources — property tax, sales tax and bed tax — account for 64.4 percent, or nearly two thirds, of the city’s $2,852,000 general fund.

The bed tax is tied directly to tourism and the sales tax is indirectly related.

The bed tax has become increasingly important in the past 10 years, Belknap noted.

In the 1979-80 budget, he said, it accounted for 7.5 percent of general fund revenues, but in the new fiscal year it will amount to 17.2 percent, an increase of 229 percent in a decade.

The bed tax was increased by a third in 1985 and this accounts for some of the increase, but Belknap said the figures still show more and more tourists are coming to Ojai and leaving their tax dollars behind — an anticipated $490,000 in the new fiscal year.

Sales tax figures also point to the impact of tourism on Ojai. About 25 percent of the general fund comes from the sales tax, a figure that has remained relatively constant over the years, but per capita comparisons tell a different story.

Ojai had the third highest sales tax per capita in Ventura County for the fourth quarter of 1988, according to the State Board of Equalization. Belknap noted the per capita figure for Ojai of $2,017 was exceeded only by the cities of Ventura and Thousand Oaks, both of which have regional shopping centers.

These retail centers account for much of those communities’ sales tax revenues, Belknap said, noting that Ojai lacks such a center.

And, Ojai’s annual growth rate of .64 of a percent makes it the slowest growing community in Ventura County. This, said Belknap, means that a populations shift is not accounting for the sales tax locally.

The manager said all this is a mixed blessing for Ojai. While it brings money into city coffers, it also makes the city vulnerable to economic shifts.

The tourist-based economy puts a strain on several city services. Traffic is the most obvious, according to the manager, but there are others as well.

Belknap said he would like to see Ojai approach the situation by building a large budget reserve for bad times and to diversify the local economy.

Belknap used the Oxnard city budget by way of comparison.

Oxnard’s reserves equal about 15 percent of its annual budget, while Belknap is trying to build a 30 percent reserve locally.

In terms of revenue sources, the manager noted that property, sales and bed taxes account for less than 40 percent of Oxnard’s general fund compared to roughly two-thirds in Ojai.

Belknap cited Houston as an example of a city that relied on a single-based economy. When the bottom fell out of the oil market, Houston’s economy collapsed.

The answer for Ojai is to be conservative, Belknap said, adding the city must expand it economic base and increase its reserve for bad times.

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