Lodging Tax Revenue Up
GRAND RAPIDS — Receipts to the county's lodging excise tax were up for the first quarter of the fiscal year when compared to the same period last year.
The tax revenue, collected by hotel and motel operators in the county, totaled $610,066 for the first three months of the year — up by 7.2 percent from the $568,909 gathered from January through March of 2004.
County Fiscal Services Director Robert White called the gain significant, as the forecast predicted a small revenue hike of eight-tenths of a percent over last year's take of $4.17 million. But White said there was no way to know whether the convention business or business travelers were behind the increase.
If the percentage gain continues for the entire year, however, it would mean an additional $299,995 to the tax fund above last year's amount and result in the current year's total rising to $4.47 million — an amount that would be the most revenue the fund has received since at least 1999.
The tax revenue is important to the county because it is used to make the bond payments on DeVos Place, the city's convention center. A payment of $4.57 million is on the books for this year.
The receipts are also used to fund the Convention and Visitors Bureau and the John Ball Zoo. Support for the CVB is at $840,000 this year, up a bit from last year, and the zoo will receive $435,000 this year, also a bit more than last year.
So expenses for the lodging fund are expected to top $6 million this year, while revenue has been projected at $4.38 million — a figure that includes tax receipts, interest income and two other small sources. Those numbers leave the account $1.63 million in the red for the fiscal year and mean that the fund's balance would have to be drawn down by that amount.
The fund balance, or reserve account, began the year at nearly $5.7 million.
And White said the account would continue to be drawn down unless the tax revenue grows by 3.8 percent each year because the county's debt service rises by that amount each year through 2028.
White said if the tax revenue doesn't keep pace, some funding cuts would have to be made or some funding may even have to be eliminated. The county can't reduce the bond payments, so either the CVB or the zoo, or maybe both, would have to take financial hits.
At the current projected deficit of $1.63 million, the entire reserve fund would be gone in 3.5 years.
Total income last year to the lodging excise fund reached $4.21 million and was the first increase the fund has had since 2000. Almost all the gain was recorded in the fourth quarter of the year. Expenditures, though, left the fund with a deficit for the year.
The lodging excise tax, or hotel-motel tax, is generated by adding a 5 percent surcharge to a guest's stay at a hotel or motel located in Kent County.
*Fiscal year projections.