By vincent todaro
Staff Writer
A new tax on hotels and motels could allow East Brunswick to collect an additional $240,000 this year in tax revenue and even more in upcoming years.
At its meeting Monday night, the Township Council unanimously introduced an ordinance that would impose a hotel/motel tax in the township. Recent state legislation created the tax, and the revenue will be split between the state and the municipalities.
Mayor William Neary said the township estimates it will receive an additional $240,000 in tax revenues the first year of the tax, from this July to next. That is equivalent of just over one tax point, or 1 cent for each $100 of assessed valuation. The tax is 8 percent for each hotel bill.
For fiscal year 2003-04, the state will receive 7 percent of the tax, and the township will net the other 1 percent. However, the formula changes for subsequent years. For example, in 2004 the state’s share will be reduced to 5 percent and municipalities’ share will rise to 3 percent.
The 3 percent is equal to about $700,000, or 3.5 cents on the tax rate. The estimates are based on local hotels and motels doing as well as they have recently, Neary said.
Councilman David Stahl, who advocated the hotel/motel tax during his campaign last year, praised the measure after Monday’s meeting.
"I think the time for its passage is certainly now," he said. "New Jersey is one of only two states in the union without this tax. Our town must provide services and other infrastructure to nonresidents who stay at hotels."
He said the tax is much higher in most other states.
"Our [revenues] will be in excess of three tax points, and that’s tremendous," he said.
Democratic council President Donald Klemp said the additional revenue will help negate revenues the township lost due to the sluggish economy. The township is not looking at the additional tax revenue as an excuse to spend more money, he said, but rather to offset the revenue losses.
It has not yet been determined how the state will physically get the money to municipalities, though, according to Business Administrator James White. He added the state is hoping to have the problem solved this week. The township’s finance director, L. Mason Neely, has mentioned wire transfers as one solution, and will meet with the state this week.
White also said East Brunswick is one of the first towns in the state to adopt an ordinance regarding the tax. The township, in fact, is receiving telephone calls from officials in other towns who want to see how the ordinance is written.
Township Attorney Michael Baker said the legislation received strong bipartisan support on the state level, something which is not frequent.
"This did have bipartisan support, which tells us something," he said.
The legislation gained momentum recently, Klemp said, especially with the slow economy.
Stahl said the legislation changed form many times, and at one point the state was the only entity that would have benefited from the tax.
Neary said the township currently has five hotels and motels. Two more, a Holiday Inn Express and Comfort Suites, are on the way. The Comfort Suites will be located behind Sam’s Club, and the Holiday Inn will be situated behind the Hilton.
He said part of the township’s economic strategy has been to get more hotels, as well as doctor’s offices, because it considers them good ratables.

