Cannon Beach City Council rejects 5% food tax

Oregon Coast

Restaurant workers feared the tax would hurt their businesses

PORTLAND, Ore. (KOIN) — Some restaurant workers in Cannon Beach breathed a sigh of relief after the city voted against an ordinance to implement a tax on prepared food.

Cannon Beach City Council voted 2-3 against the ordinance during a Wednesday night session. The council is expected to consider a resolution on Aug. 3 to put the proposal on the November ballot.

If passed, people would have been required to pay a 5% tax on food items (not including beverages) purchased at restaurants or delis starting in July of 2022. Fifty percent of the tax revenue would have gone to the city and the other 50% would have gone to the Cannon Beach Rural Fire Protection District.

The small town of about 1,500 people has been split on the issue.  

At a city council meeting to discuss the tax on July 6, resident William Norton defended passing the tax to fund the fire district. 

“What if we had an earthquake? What if we had a catastrophic forest fire? What if we had some kind of event in town that caused a massive amount of destruction? How do you respond with those types of events on a very low budget?” Norton said. 

Other people in the community, particularly restaurant workers, said they want to support the fire district, but implementing a tax isn’t the best way to do it. 

Restaurant workers fear that if customers have to pay a tax, they’ll leave smaller tips. They’re also concerned customers will drive to nearby Seaside where there isn’t a food tax in place. 

“We’re struggling as it is. We are having a very difficult time keeping any kind of a staff. The cost to implement this, especially for smaller businesses would really impact them,” said Crystall Marshall, who works at Pig ‘N Pancake in Cannon Beach.

City Councilor Nancy McCarthy, who supports the tax, said as the ordinance is written, restaurants will get about 5% in tax revenue back every quarter, which should help offset expenses. 

On July 6, McCarthy and two other councilors voted to proceed with an ordinance on the food tax, rather than putting it on the ballot for voters to decide.

McCarthy said the city had planned to use revenue from the tax to replace City Hall and the police station. 

“We, as you know, are very susceptible to earthquakes and tsunamis here as well as other natural disasters, and our city hall really needs an emergency operation center,” she said. 

The fire district is also desperate for more funding. Mark Reckmann, fire chief at Cannon Beach Rural Fire Protection District said from January through May 2020, the number of calls his district responded to was up 40% from the average for that time period. The district usually sees about a 5% increase every year. 

In 2020, 77% of the calls the district responded to were people who don’t live in the district. Many of them were tourists. 

Reckmann said he was the person who pitched the tax idea in May 2019 and said he sees it as a way for tourists to contribute to the city, rather than burdening residents. 

Although the city council has been mulling the idea of a food tax for two years, Marshall said she still felt blindsided by how quickly it moved along said after everything restaurants experienced with the pandemic and shutdowns, this is the last thing they need. 

“If only you knew. If only you knew what these restaurants, and, and the employees have gone through the last year and a half. It’s indescribable, how difficult it was,” Marshall said. “This is bad timing. This is not a good time to do this.” 

The City of Newport is also starting to consider a 5% food and beverage tax. The city is holding a public hearing Monday, July 19 in the City Council Chambers of the Newport City Hall. The tax would fund maintenance and improvements to facilities throughout the city.

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