Revenue from lodging tax is up

August 19, 2011
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Tax revenue to the county’s lodging excise tax fund was up by more than 27 percent for the first six months of this year compared to the same timeframe last year. The fund’s tax receipts totaled $2.3 million through the end of June, up by roughly $500,000 from a year ago.

A higher occupancy rate and higher room revenues were reasons cited by the county for the gain in tax revenue. The county collects 5 percent from every guest’s bill at each hotel and motel in the county, and then uses those dollars to pay for much of the construction that built DeVos Place and to market the county as a business and tourism destination.

One organization that receives those dollars is the West Michigan Sports Commission, a group that is charged with bringing youth and amateur sporting events here to boost the local hospitality industry. The WMSC was the brainchild of the Kent County commission and a group of private individuals back in 2007.

Commissioner Roger Morgan was instrumental in getting the WMSC ball rolling and Commissioner Dan Koorndyk headed the committee that led to its creation. Commissioner Dick Vander Molen chairs the WMSC and Assistant County Administrator Wayman Britt serves as vice chairman. The county awarded the WMSC $1 million for operations over five years but those funds will run out at the end of this year.

Even though tax revenue is up, commissioners allocated $2 million from the general fund to subsidize the lodging-excise fund this year because its expenditures were projected to be about $2 million more than its revenues. If the subsidy is needed to meet expenses at the end of the year, it would mark the third consecutive year the county has used general operating dollars to keep the fund in the black.

If tax revenue to the fund doesn’t increase, then spending cuts might have to be made and the WMSC could see its funding reduced — or, as a worst-case scenario, eliminated. The five-year, $1-million award to the sports commission was made before the county began subsidizing the lodging-excise fund.

But a few county commissioners recently began lobbying for the WMSC before the group’s funding for next year had even been addressed.

“This is a successful example of a public-private partnership,” said Commissioner Stan Ponstein of the sports commission. Ponstein added that the county’s financial support of it has created jobs and he noted that not all tax spending is bad. “This is one of the things that make Kent County great.”

“I think the West Michigan Sports Commission is one of the top five things that people tell me should be supported,” said Commissioner Jim Saalfeld.

“We have to cut spending in a lot of areas, but this is more of an investment,” added Commissioner Tom Antor.

Commissioner Michael Wawee said most every restaurant between Sparta and Walker was filled with customers following a wrestling event held at Sparta High School during the Meijer State Games of Michigan that the sports commission hosts. Wawee said he spoke with many of the restaurant owners, who told him that business was very good during the weekend event, even during normally slow weekend afternoons.

Commissioner Bill Hirsch asked WMSC Executive Director Mike Guswiler if the organization needs more funding from the county. “We continue to look at means and ways to find additional funding,” he said, pointing to receipts the commission gets from events and the fundraiser it holds. “In order to continue to do our work, we’re going to need funding as a nonprofit.”

The WMSC operates annually on a budget of $550,000. Besides Kent County, Experience Grand Rapids gives it $150,000 a year from the 3 percent tax it levies on lodging guests, and the Convention and Arena Authority donates $25,000 annually. Private donations also make up a portion of its budget.

Since the WMSC begin operating in 2008, it has hosted 170 groups that have brought 191,800 visitors here. Those visitors have booked 58,328 rooms and spent $52.5 million over the past four years. As of now, the WMSC has 13 groups coming next year that are expected to bring 14,600 visitors who will book 12,000 rooms and spend $12.3 million.

“We are always going to look out to the future and try to capture some of the bigger events that bring thousands here,” said Guswiler, who is on the board of the National Association of Sports Commissions. “In the meantime, we’ll try to fill the gaps with smaller groups.”

The county also supports Experience GR through the lodging-excise tax fund. The former Convention and Visitors Bureau is expected to receive $620,000 from the account this year. But the fund’s largest annual expenditure is for the DeVos Place bond payment, which is $5.6 million this year and 3.6 percent higher than last year’s. The bond payment alone exceeds all the revenue that the county receives from the lodging tax each year. This year’s tax-revenue take is projected at nearly $4.6 million.

Sports tourism has been estimated to be a $6 billion industry annually nationwide.

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