Hotel tax revenue sees double digit rise
County general fund squeezes out small surplus for past year.
Kent County Fiscal Services Director Stephen Duarte reported last week that total tax revenue to the lodging account was $6.58 million for the past year, up by an unexpected $800,000 from the $5.8 million in 2011. The fiscal forecast made at the beginning of last year called for tax revenue to go up by 1.6 percent, not the 13.4 percent the current calculations revealed.
“That’s a whole lot larger than anything in the last three years,” said Duarte.
He said $435,000 of the $800,000 came from two hotels that were delinquent on their tax payments. Both became current when one paid the county $270,000 and the other $165,000. About 30 percent of those payments were for back taxes.
As of last week, total revenue to the fund was $7.4 million in 2012 or about 3 percent higher than 2011. But the county transferred $841,000 from its general fund to the lodging account last year in order to boost the revenue and avoid a shortfall for the account’s expenses.
Expenditures rose by roughly the same percentage as revenue did last year to $7 million. The largest expense was the $5.8 million semi-annual bond payments that helped finance the construction of DeVos Place, the city’s convention center. The total debt service was 3.6 percent, or $200,000, higher in 2012 than in 2011.
“Based on the current trends, it is expected that this fund will close out the current fiscal year with a balance of $1.1 million,” said Duarte.
The county’s hotel-motel tax is a 5 percent levy operators added to each guest’s bill. Last year’s occupancy rate hovered around 60 percent, the highest since 2001.
As for the county’s general fund, which covers most services, Duarte said property tax revenue for the year was $83.1 million, down by 2 percent from 2011. Total revenue, though, was up by one-tenth of a point to $158.8 million.
That gain was largely due to a $2 million increase in the “other revenue” category that came from billing tenants for the debt service on the county’s Department of Human Services building. For the past two years, Duarte said the debt had been paid by excess bond proceeds.
The general fund’s overall expenditures also rose by one-tenth of a percent to $158.8 million, even though the cost of employee health insurance coverage fell by 4.5 percent for the year to $10.7 million. Total wages rose last year by 1.2 percent to $61.7 million.
County pension payments went up by 1.3 percent in 2012 to $5.35 million. Employees are paying an additional 1 percent for their retirement plans this year and will do the same next year.
“We’re expecting a small surplus of $7,000 this year, but that could change,” said Duarte of the general fund’s final tally. In 2011, the surplus was almost $54,000.
The county’s cash balance dropped from $67.3 million at the start of 2012 to $62.2 million at year’s end. The change means the county has enough reserve to operate for 99 days without additional revenue. A year earlier, it had enough cash for 108 days of operations.
The county’s fiscal year is same as the calendar year.