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City Council, December 5

Council approves 2013 budgets
But Council member Wilson wonders about Accommodation Tax distributions
Warwick Jones

The main items on the agenda of last night’s meeting were the 2013 budgets – for the General and Enterprise Funds, the Hospitality Fee, and the Accommodation Tax. All passed without amendments and a comment only from Council member Wilson.

The budget for the General and Enterprise Funds was discussed in previous meetings and the draft was published some weeks ago on the City’s web site. A detailed summary was posted on this web site over a week ago. Spending in the General Fund was projected to rise 4.6% to $138.9 million and was supported by projected increases in property tax and business revenue. There was no increase in property tax rates.

The Hospitality Fee income is derived from a 2 cent “tax” on hospitality derived revenue of restaurants etc. The derived revenue must be directed to tourist related activities,. Revenues projected for 2013 amount to $11.97 million, down slightly from the previous year’s $12.40 million. Viewers can press Download file to see the recipients and amounts.

As in previous year, the City’s General Fund and Capital Improvements Funds are the largest recipients of the Fee. Although the detail is not broken out, the monies directed to the General Fund are used to cover tourist related costs of public safety, debt service, personnel and operating cost of tourist related facilities and function. Monies directed to the Capital Improvements Fund cover items as the Gaillard Center, Angel Oak, the historic seawall, etc.

The State Accommodation Tax income is projected at $.4.23 million, little changed from the previous years $4.18 million. The tax is drawn from a 1% tax on accommodation derived revenue such as that generated by hotels. Similar to the Hospitality Fee, the funds must be distributed to entities that help draw tourists to Charleston. Viewers should press Download file to see the recipients and amounts.

Council also passed a budget on the Municipal Accommodations Fee, also equal to a 1% tax on accommodation derived revenue. The monies so derived are spent on City projects that again are tourist related. Income for the year is projected at $2.3 million. However, spending is projected at $3.38 million, the difference being met largely from the $1.08 million Fund balance. Of the total spending, $2.1 million will be directed to the new Gaillard, $700,000 to the Colonial Lake Renovation, $280,000 to the Governors Park Complex and $288,000 to the Energy Performance Contract. We do not have figures for the previous year.

As we noted earlier, Council member Wilson made the only comment on the budgets. She asked about the application process, the oversight and determinations relating to the distributions of Accommodation taxes. We suspect, that like many others, she wondered whether some of the recipients truly qualified and provided much benefit to the tourist industry.

CFO Bedard responded to her question noting that applications had to go through a rigorous process and where a lot of details were required. He noted that the State could audit the funds if it thought it necessary but no audit had been requested to date. Allocations under State Accommodation Tax had to be approved by a committee composed of citizens drawn from the tourist and hospitality industries. Council member Hallman headed this committee. He commented that he would welcome any recommendations to improve oversight. CFO Bedard also noted that the Mayor had to approve all the applications.

(Marc Knapp is on a business related trip)

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