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County Council, April 21

Distribution of Accommodation Tax revenues still unresolved
Those to the Colleges for sport arenas should be eliminated
Warwick Jones

Council last night whipped through the agenda and approved all the items from an earlier Finance Committee meeting. And then it came to the Accommodation Tax budget. With revenues projected well down in Fiscal 2010, Council had to make some hard decisions. Who was going to suffer cuts in distributions? After an hour or so of discussion, there was only modest progress. Frustration showed on the faces of Council members and Council member Rawl admonished Council for not adhering to the agreement reached at the Finance Committee meeting. Council member Condon came up eventually with a motion that Council could agree to. Thankfully, it saved us a long meeting, but Council was still a long way from a resolution.

The Accommodation Tax is imposed by the County. It is 2% on revenue from accommodation provided by hotels, guest houses etc in the County. The revenue so derived is distributed in a way, and to entities, to support the tourist industry.

Falling revenues
Early last year, the County projected revenues of $10.6 million for fiscal 2009 (to June) but late last year reduced its projection to $9.3 million. With the recession cutting into tourist spending, the County is now projecting revenue of $8.8 million. However, with the automatic reduction in distributions to the municipalities and the Visitors Bureau (they receive 20% and 10% of collections respectively), coupled with a cut to the PRC, the County will be able to meet most of its original distribution plan, ending the year with only a small deficit.

Available funds to decline 26% in 2010
But the problem is not this year, it is fiscal 2010. Staff is projecting collections of only $8.1 million for fiscal 2010. Who is going to feel the pain? And although the fall in collections next year may be less than 10%, funds available for distribution will fall much more. The County started off fiscal 2009 with a kitty $1.3 million, giving it a total of $10.1 million for distribution. After accounting for the small deficit projected for this year, funds available for fiscal 2010 are only $7.9 million. This represents a fall of 26%. Press Download file to see projected figures.

There were 3 motions put before Council last night in relation to distributions for 2010. They all failed. As Council member Condon noted, the issues were confined to the distributions to the College of Charleston, the Citadel, the municipalities and “Others”. The “Others” were the list of non-profits such as Spoleto, South East Wildlife Exposition (SEWE) and the Aquarium that traditionally receive contributions So she moved that distributions be approved except to these entities and that Council address the remaining distributions after further study. Council agreed.

Mayor Riley expresses concern
Mayor Riley of the City of Charleston attended the Council meeting and spoke at its conclusion. Obviously fearful that the County would cut back the municipalities, and specifically the City of Charleston, he spoke of the needs of the City and the important role it played in attracting tourists. He indicated that many of the folk that spent the night in hotels outside the City had come specifically to visit the City. And the City had the extra responsibility of ensuring their safety especially at special events. He also spoke of the pact the City made with the County when the Accommodation Tax was first proposed some 15 years or so ago and the fixed percentage distribution (20%) that would go to the municipalities. He indicated that he expected the distributions would fall next year because of lower revenues but hoped the County would be fair in its determination (Of the $1.307 million projected for distribution to the municipalities next year, the City would receive $642,000 under the original distribution plan. At the Finance Committee meeting last week, it had been proposed that the City’s allocation would be reduced to $481,600. The County estimated that the reduction would amount to only 0.1% of the City’s General Fund budget.)

An unusual exchange
Council member Rawl seemed unsympathetic to the City’s plight and pointed out that many of the entities receiving funds were located in the City. He also reminded the Mayor of a comment he made in a letter. “Times have changed” the Mayor said in the letter to the Council member. Council member Rawl said the Mayor should heed the same comment. We wondered whether this was a tad vindictive and personal. Our view hardened when the Mayor said that the comment was made in a letter to the Council member in relation to an issue on Johns Island and the change in the Urban Growth Boundary. We know no more than that, but Council member Rawl is suing the City over a down zoning of a family property on Johns Island.

We can only guess the likely outcome of further deliberations by Council on the distributions. We suspect that the undetermined distributions will all be reduced from those of 2009 and that the heaviest cuts will be the “Other” categories (Spoleto, SEWE, Aquarium etc). It also seems likely that the College of Charleston and the Citadel will continue to receive funds to finance their new arena and stadium respectively. They are seeking $150,000 and $300,000 respectively.

The distributions to the colleges should be eliminated
We have written about the distributions to the two colleges before. The distributions should be eliminated, we feel. The applications that both colleges made in 2009 were months after the deadlines for applications. That the Council imposes a deadline on other entities but relaxed it so much for the colleges cries injustice. We also dispute the merits of their cause. How many “heads on beds” do the Colleges generate with their new stadiums? We think not many. It is particularly irksome to think that funding for these stadiums was in place when the applications were made. Indeed, the College of Charleston stadium was near completion yet the Council still moved to grant it funds. An application for a contribution is opportunistic we agree, but this was particularly so. The College didn’t need the money. It had the funding in place – but it just wanted the extra funds.

In our view, it would be particularly egregious if the colleges received contributions and that more certain, substantial and reliable contributors to tourist revenues such as SEWE and Spoleto were cut back It would also be egregious if it were at the expense of the City of Charleston as well. The City with its historical and gracious houses is the backbone of the local tourist industry.

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