County Hotel Tax Revenue Increases

February 22, 2005
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GRAND RAPIDS — While revenue to KentCounty's general operating fund was below expectations for the fiscal year, receipts to the lodging excise tax rose for the fiscal year.

Revenue from the lodging excise tax, also known as the hotel-motel tax, grew 2.8 percent last year from the previous year to $4.21 million. CountyFiscal Services Director Robert White said the increase was the first gain the account has had in four years. Almost all the gain, 2.7 percent of it, occurred during the last quarter, as for the first nine months of the year receipts only rose by one-tenth of a percent.

Still, the fund's expenditures topped its revenue by $1.04 million and lowered the fund's balance to $5.77 million at the end of 2004. Expenses jumped by nearly 10 percent last year while the account's total revenue grew by 3.7 percent. The resulting $1.04 million deficit was close to its projection.

White told members of the Finance Committee that revenue from the lodging tax has to rise by more than 3.8 percent each year, or a full point higher than last year's gain, to meet the annual increase of the bond payments for

DeVos Place

The tax is funding a $96 million package that helped pay for the construction of the new $212 million convention center. The expenditure for last year's payment was just under $4 million, and it should rise to about $4.14 million this year.

Under the lodging tax, hotel and motel operators add a 5 percent surcharge to a guest's bill. The Convention and Visitors Bureau and John Ball Zoo also receive funds from the tax.

As for the county's general operating fund, revenue was nearly $142.2 million, roughly $2 million less than expected. Expenditures were $146.8 million, leaving the account with a $4.6 million shortfall for the fiscal year. The deficit, though, was $3.66 million less than projected at the beginning of the year.

The fund balance for the general operating account was drawn down by almost $8 million last year to $77.5 million. The county dipped into the reserve for the fund's $4.6 million shortfall and for $3.3 million to cover capital improvement projects and property purchases for the parks system, most notably MillenniumPark

In other fiscal news, the county's bond rating was recently lowered to AA2 due to the state's lagging economy and a local unemployment rate higher than the national average.    

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