Healdsburg bed taxes down 7%

Healdsburg, one of Wine Country's prime tourist destinations, is seeing its hotel tax revenues dip along with the downturn in the economy.

A review of the city budget reveals bed taxes are down 7 percent for the fiscal year, about $151,000 less than the $2.1 million anticipated.

"It's a concern, but not an alarm," City Councilman Gary Plass said Friday. "People are still traveling to Healdsburg, probably more so than other places. We still have a good draw. We're just experiencing a lull."

On President's Day Weekend, the Hotel Healdsburg was almost sold out, belying a recent downtrend in overnight stays.

The 55-room hotel, with rates starting around $265 a night, was "almost fully reserved this weekend through next week," said Eric Risby, the front office manager.

But to attract visitors these days, he said, the hotel is offering incentives beyond the hot breakfast and valet parking that goes with the room. There are spa and dining packages, as well as $100 discounts for return guests.

Most callers are looking for a special rate. "You have to offer a lot more to entice people," Risby said.

City officials pay close attention to the 12 percent bed tax levied in Healdsburg, most of which goes to pay for park and recreation programs.

That's partly because Healdsburg, which is growing slowly with about 35 new homes a year, relies less on new development fees than cities such as Santa Rosa.

"While bed tax has been a real benefit in the city, we should expect some downturn as this economy reels," Healdsburg City Councilman Mike McGuire said Friday. "Healdsburg is a destination. When people feel pain in their wallets, they won't be traveling as much."

In recent years, Healdsburg has enjoyed steadily growing bed tax revenue with double digit percentage increases year to year. But city officials have had to adjust their expectations with the decline in bed taxes they began to notice in September.

Other revenue categories also are down. Sales taxes are now expected to be five percent less than anticipated, according to City Manager Marjie Pettus.

No city layoffs are being contemplated currently, city officials said.

The $7.9 million general fund for 2008-09, almost all of which pays for police and fire services, has a cushion in the form of $4.2 million in reserves. However, city officials have been warning that the reserve will be exhausted in a few years with a steadily widening gap between revenues and expenses.

This fiscal year city officials were anticipating a $762,000 deficit in the general fund. Through a series of cost-cutting measures, the deficit is actually on track to be less -- around $521,000.

Vacant positions have been left unfilled in public works, administration and the electric utility. Fire and police vehicle replacements were put off. Early retirement of senior police officers saved $91,000.

In the long run, City Council members said Healdsburg will continue to have to tighten its belt. But for the time being, talk of a voter-approved sales tax increase to bolster the general fund -- an idea mentioned over the past several years -- appears to have faded.

"It's not the time or the climate to go to the electorate and ask for a sales tax (increase)," said McGuire. "It means we will have to be very creative in budgeting and living within our means."

"The review tells us we're in a pretty good place," said Plass. "Having said that, we know we face potential and probable deficits in the future."

You can reach Staff Writer Clark Mason at 521-5214 or clark.mason@

pressdemocrat.com.