This story was updated on Thursday, Sept. 8.
PROVINCETOWN — At least in some ways, the Outer Cape economy seems to have shaken off the effects of the Covid pandemic. The fiscal year that began July 1, 2021 and ended June 30, 2022 has brought in rooms tax receipts that leave all four towns with million-dollar decisions to make.
The tax receipts are over $1 million in Truro and Wellfleet, $1.5 million in Eastham, and a whopping $5 million in Provincetown.
The rooms tax is a surcharge levied on bookings in hotels, motels, and campgrounds; in 2019 it was expanded to cover stays in short-term rentals such as those advertised on Airbnb and VRBO. That expansion turned the rooms tax from a small line item in the Truro, Wellfleet, and Eastham municipal budgets into something much bigger. Wellfleet received only $116,000 in rooms tax in the fiscal year just before the expansion, for example, but in the year that just ended, the town took in $1,107,000.
Eastham collected $293,000 in rooms tax before the 2019 expansion, but this year received $1.5 million. Truro brought in $370,000 the year before the expansion; with short-term rentals included, Truro is now netting $1,247,000.
The revenue is important because short-term rentals are widely seen as a major driver of Cape Cod’s housing crisis, and in particular the loss of seasonal and year-round rentals. Housing advocates point to the new tax revenue as money that can be used for municipal housing efforts.
Provincetown voters in April approved a new allocation formula that will set aside 30 percent of the tax revenue for housing. But applying that formula depends on a home rule petition that has not yet been passed by the state legislature. In the meantime, the town is receiving rooms tax in quarterly installments that are still being divided according to the old formula, which does not include an allocation for housing.
State Sen. Julian Cyr said he thinks Provincetown’s home rule petition will pass before the end of this year in the legislature’s informal session, where bills require unanimous consent to advance.
Provincetown has a much larger hotel industry than the other Outer Cape towns, and even before the expansion the rooms tax was bringing in $2.2 million here. To allocate that revenue, Provincetown established a formula, which had to be approved on Beacon Hill as a home rule petition, to divide that money four ways — into the town’s general fund, tourism fund, capital stabilization fund, and wastewater fund.
Since that older formula is still in place, of the $5,071,000 that was just collected, 35 percent, or $1.77 million, will go into the town’s tourism fund; 27 percent, or $1.37 million, will go into the general fund; 25 percent, or $1.27 million, will go into the capital stabilization fund; and 13 percent, or $660,000, will go to the town’s wastewater fund.
The town’s tourism budget for the fiscal year that began on July 1, 2022 is $960,000. The reallocation measure at town meeting showed $846,000 as the proposed share of rooms tax for the general fund.
In other words, Provincetown now has more than $1 million in excess revenue in the tourism and general funds.
Extra money that lands in the tourism fund could be transferred out and used for housing, Town Manager Alex Morse told the select board last year. Extra money in the general fund will become part of the town’s free cash and can be used for any purpose. Money that lands in the town’s capital stabilization fund and wastewater fund, however, cannot be transferred to a housing fund, then-finance director Joseé Young told the Independent last summer.
