With $90 Million Up for Grabs, Visitor Impact Task Force Faces Hefty Charge

Dec 20, 2016

From the Austin Monitor: The city’s new Visitor Impact Task Force hopes to accomplish several goals in the next four months, all of them having to do with how the city can best grapple with the growing number of tourists coming to Austin each year. But the most significant of those goals by far is coming up with ideas for how the city could divvy up revenue collected from the local Hotel Occupancy Tax – known as the HOT tax – which is expected to surpass $90 million in Fiscal Year 2016-17.

That projection makes HOT tax revenue one of the larger pots of money in the city’s annual budget, and the current city ordinance governing its use allows it to be split up three ways: 64.3 percent to the Austin Convention Center’s capital improvement fund, 20.7 percent to the city’s tourism and promotion fund and 15 percent to the cultural arts fund.

Organizations backing local artists and other interest groups have been pushing for years to reallocate the HOT tax money in a variety of ways, arguing that their causes contribute significantly to visitor interest in Austin. As an example of that, last week’s introductory meeting for the task force featured public comments from two representatives of local springs conservation groups offering their thoughts on why visitors so frequently seek out Austin’s natural resources on trips.

What brought significant scrutiny to the issues of tourists’ relationship with Austin was a push by City Council Member Ellen Troxclair to end the city’s fee waivers for festivals such as South by Southwest and instead use HOT tax money to cover the roughly $1.5 million bill the city foots for police and other support services during the 10-day event.

In a recent op-ed in the Austin American-Statesman, Troxclair said that contrary to the current practice of using the General Fund to cover the costs of tourism-related activities, the money generated from the tax on tourists’ hotel visits is a more sensible source.

Troxclair told the Austin Monitor that she and others around Austin were surprised to learn that there’s a sizable amount of money generated through tourism that can’t be redirected to furthering tourism-related groups. City figures show HOT tax revenue growing by double digits annually, with the $90 million figure representing 14 percent growth over FY 2015-16.

“I saw how much (HOT tax revenue) is growing, but there are lots of people who are surprised to find out we have a huge pot of money for tourism and some of our biggest events don’t see it,” she said. “A huge part of our economy is dependent on tourism, and there are lots of residents who benefit solely based on the revenue that tourists bring here.”

Troxclair’s August action to create the task force gave it a long to-do list, including directing it to study the “impact of tourism on City infrastructure, services, and facilities, and investigate opportunities to offset those impacts by using Hotel Occupancy Tax revenues” along with looking at how other Texas cities use hotel tax money, determining what attractions are the biggest tourism draws for the city and weighing in on the proposed expansion of the convention center.

A large portion or all of that work needs to be completed over seven meetings in the next three months so that Council can have recommendations to consider in time for the work sessions on the next city budget. Those meetings are tentatively scheduled to take place from 3 to 6 p.m. every other Tuesday, beginning Jan. 3 at the Palmer Events Center.

Larry Schooler, manager for the city’s public engagement department and the facilitator for the task force, said Council will likely be looking for a conceptual framework for how to allocate HOT tax money in the future instead of naming specific groups that might merit consideration.

“I’m no fortune teller, but my guess is that any recommendation to give money to a specific group would be sort of a red flag for the Council and will cause others to start looking after their own interests first,” he said. “That’s part of the reason why we gathered a list of everyone’s collective interests when we started, so we know where everyone is coming from.”