Hotel tax take dips

October 12, 2009
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While county officials are expecting less revenue from property taxes next year, they now are pretty certain they’ll see less revenue from the lodging excise tax this year.

Revenue from the county’s hotel-motel tax was down by 10 percent in September from last September, and by 6.9 percent, or $373,505, so far this year from last year.

“This is now a subsidy situation,” said Robert White, county fiscal services director.

County commissioners are expected to take $344,380 from the general fund reserve and transfer it into the lodging excise account next week to cover the deficit. Doing that will result in more than $500,000 being transferred from the general fund to the excise account so far this fiscal year.

The county charges a 5 percent tax to a guest’s lodging bill, while the Convention and Visitors Bureau collects another 3 percent from every tab, meaning the total hotel-motel tax is 8 percent.

The county is charging the maximum allowed by state law, but the CVB can assess another one percent. County Commissioner Dick Bulkowski suggested the bureau should consider doing that to help stop the flow of red ink from the fund.

“That discussion is going on with the hotels,” said CVB President Doug Small.

Small said raising the CVB tax by one percent would add about another $1 million each year to the bureau’s revenue.

The county is in the final year of its funding agreement with the CVB. This year, the county gave the bureau $700,000 and has targeted $625,000 as its contribution for 2010.

The lodging excise fund has had a deficit every year since 2003. The deficits have ranged from a low of $447,360 to a high of $1.37 million over those years.

The largest expenditure the fund has is making $5 million worth of payments on two bonds that helped build DeVos Place. If funds from the lodging-excise tax are unable to meet those payments, the county would then be forced to pay bondholders with money from the general fund. The county’s general fund is facing a $1.8 million shortfall this year, and a $2.4 million deficit has been projected for next year.

Revenue to the lodging excise tax was to have totaled just under $5 million this year. At the end of September, the county had collected $4.6 million in revenue. The fund’s total expenditures for the year are $5.92 million.

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