County holds off on bed tax decision

10/2/2012

FCEDC, CVB boards to further explore plan before deciding on reserve fund.

FCEDC, CVB boards to further explore plan before deciding on reserve fund.

BY ANGIE HAFLICH

ahaflich@gctelegram.com

Finney County commissioners on Monday took no action on a proposal for the Finney County Convention and Visitors Bureau to share transient guest tax revenues with the Finney County Economic Development Corp.

The 6 percent transient guest tax, also known as bed tax, is an additional charge added by hoteliers to their normal room rates, with the revenue generated from the tax going to the CVB. The current 6 percent guest tax rate, which was increased from 4 percent in the spring of 2010, has resulted in an almost 50 percent increase in revenue since it took effect in 2011. Based on the CVB's fiscal year ending June 30, revenue generated has increased from $341,167.72 in 2010, to $646,021.46 in 2011 and to $699,605.08 in 2012.

The FCEDC first brought up the idea of having a portion of the revenue from the bed tax allocated for economic development at the Sept. 17 county commission meeting. The proposal was to have the FCEDC's share of these funds provide an incentive reserve that the FCEDC could utilize to attract potential businesses to Finney County.

During that meeting, FCEDC President Lona DuVall and FCEDC Board of Directors Chairman Tom Walker stated that Garden City is not a tourist destination, but that it is a business attraction, and that's what the focus needs to be on.

At Monday's commission meeting, Lynn Schoonover, director of the CVB, presented the recommendation that county commissioners take no action on the proposal at this time, for two reasons: because of the recency of the proposal; and two, because the CVB has only been its own independent entity since January and hasn't had a chance to fully implement the additional guest tax revenues into its budget.

"Our funding with that increase was effective July 1 of last summer, so we've only seen one calendar year with those receipts to be implemented and used in our budget. That's a very, very short period of time, particularly since we (only) became a private entity in January. ... That's not been a very long period of time for us to be able to adapt the programs and go forward and do the things that we had intended to do, that we declared we would do, when we received that extra funding last spring," Schoonover said.

Schoonover added that the CVB's budget is determined by receipts generated in the previous year and that there hasn't been sufficient time to determine if that revenue stream will continue to increase or even stay the same.

Schoonover said that the additional revenue stream has allowed the CVB to move into its own offices, increase staff size and develop its own website. She also said that various projects and events requiring use of these funds are already in the works.

"If we were to take significant amounts of money out of our budget now, that's going to hinder the goals and the objectives that, as a board, we have determined, set and established to be able to go forward," she said.

Walker said that the FCEDC isn't asking that the funds be utilized only for FCEDC projects, but that a reserve fund be set up that could be used by either entity, with county commissioners having the final say regarding usage of the funds.

When asked by County Commissioner Cliff Mayo if FCEDC is presently in need of funds, Walker said, "There are currently 14 proposals in the works, and if one or two of those came about and FCEDC had to provide land or some kind of incentives, one would totally deplete everything they have in the county reserve ... and we have several strong candidates for relocation at the present time."

FCEDC board member Bob Kreutzer said that the FCEDC's intent in making the proposal was not to take money away from the CVB, but to restructure the language of the ordinance to state that, if and when extra monies become available, up to 50 percent can be placed in a reserve account to be utilized by whichever entity needs it.

"The way we have, in our mind, drafted this, we're not taking anything from the convention and tourism bureau at all," Kreutzer said.

Mayo said that regardless of the outcome of the proposal, he doesn't want to see division between the two boards. This prompted agreement by members of both organizations, and it was ultimately decided that boards from both entities should meet again at an undetermined time to come up with ideas prior to any action being taken by the commission.

In other business, County Administrator Randy Partington presented a report showing building and road maintenance projects that have been completed utilizing the $800,000 to $850,000 annually that Finney County receives from the quarter-cent sales tax.

The quarter-cent tax was approved by voters in April 2009, went into effect in October of that year and is set to expire on Sept. 30, 2015. The question of whether to renew the sales tax is on the Nov. 6 ballot. Commissioners plan to use the report to both inform voters about what types of projects have been funded by the sales tax and also to show the effect on property taxes, if the sales tax isn't renewed.

The $800,000 to $850,000 generated annually by the sales tax is the equivalent of a 1.70 mill levy.

Commissioners plan to share the findings of the report with the public between now and Nov. 6.

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