Hotel Excise, Meals Taxes Tank in Fourth Quarter, as Expected

It was no big surprise that hotel excise payments and meals taxes for Everett would tank in April, May and June, but the gory details of just how much became available from the state Department of Revenue (DOR) on Monday.

The biggest hit came on hotel room excise taxes, which were down by nearly $700,000. Traditionally, hotel excise has not been a source of revenue for Everett until the Encore resort and EnVision Hotel opened over the last two years.

Hotel excise tax, which is a local fee added on to every room taken out in every city and town, was seen as an excellent new source of revenue that could provide up to $5 million in found money per year.

Things were headed that way in the second quarter when the City collected $1.36 million and in the third quarter when the City collected $1.05 million. However, the latest totals showed just $377,657 in excise.

It wasn’t unexpected and Everett CFO Eric Demas said since this was the first year of operations for Encore, they had played it conservatively on hotel excise and weren’t depending on the cash flow.

That said, Encore has only opened their hotel now four days per week, and there is some question about how long it could take to be up and running in full operation. Encore President Brian Gullbrants said two weeks ago that the demand just isn’t there right now to book the hotel tower seven days a week.

The EnVision Hotel shut down completely for COVID-19 and served as a quarantine location for Everett and surrounding cities, paid for through state monies. It was uncertain as to when it would re-open for business.

It was across the board for all cities and towns, of course.

Boston showed a decrease in the fourth quarter of nearly $12 million, going from $19.68 million in the third quarter to $7.9 million in the fourth. That’s even more striking when one considers the second quarter in Boston reaped $38.85 million due to the Christmas and fall events there.

Chelsea’s hotel room excise was off by about $500,000 from its regular quarter returns of about $600,000.

For meals taxes, the fourth quarter was down more than $200,000 from the average.

The second and third quarters were $345,000 and $318,000 respectively. The fourth quarter revenues sank to $171,763.

By contrast, Chelsea revenues were cut nearly in half, going from $132,799 to $73,403.

Revenues from so-called “local option” taxes are typically very important for the normal operations of City government, and are one of only a few revenue sources other than property taxes available to cities and towns.

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