Texplainer: What are the State Event Trust Funds?
Hey, Texplainer: What are the State Comptroller’s Events Trust Funds, and how do they work?
With ground broken on the Formula 1 Circuit of the Americas racetrack southeast of Austin, the racing venue recently found itself in a dispute between the city of Austin and State Comptroller Susan Combs over the use of one of four trust funds intended to encourage the hosting of events in Texas. The funds provide money upfront to host events before the state recovers the money from hotel, alcoholic beverage, car rental, sales, and general use taxes in the period during and after the event.
Three of the funds are limited to a 30-day period around the event to recoup tax money, and are used for smaller events. The Events Trust Fund is the largest of the three and the source of the vast majority of grants. Once used only for sporting events, the fund was expanded in 2010 to include conventions and conferences. Events supported by the fund in recent years include the meeting of the North American Tri-Hull Powerboat Championship in Corpus Christi, for which the state provided $76,475; the United States Australian Football League National Championships in Austin, which received $107,230; and the American College of Gastroenterology Annual Scientific Meeting and Postgraduate Course in San Antonio, which received $831,982.
Another account, the Special Events Trust Fund, is used for events that are sited in Texas after a competitive process that includes several other possible destinations. Unlike other funds, it only uses general use and sales tax receipts to replenish the fund. The only non-sport beneficiary of the fund was the 2008 Latin Grammy Awards in Houston, which received $533,942 of state money. It is the only fund which does not require city or county governments to contribute their own money.
The Motor Sports Racing Trust Fund, as the name implies, is used to entice racing events to Texas, but is limited to those that use “temporary venues,” like the Indy Racing League events in Houston in 2006 and 2007, which received almost $3 million between them.
The fourth account, the Major Events Trust Fund is used for major national or international sporting events. Super Bowl XLV in Arlington received more than $26 million from the fund, the highest dollar figure for any event so far in the fund’s history. Like the Events Trust Fund and the Motor Sports Racing Trust Fund, the Major Events Trust Fund requires local governments to match state funding, at a ratio of $1 of local money to $6.25 of state money. But it recovers its expenditures during a twelve-month period, instead of 30 days.
The fight over F1 funding came after Texas Comptroller Susan Combs approved $25 million of METF money for the Circuit of the Americas before the Austin City Council approved the allocation of city funds, some $4 million, to match the state’s. A recent city council run-off election appeared to make the approval of city money for the project unlikely, but the council recently approved the F1 proposal in a 5-2 vote.
Use of the event funds has exploded in recent years. Between Fiscal Years 2006 and 2009, the funds gave out less than $23 million in grants. In FY 2011 alone, that number had grown to some $78 million.
Bottom line: The four event trust funds are intended to provide upfront capital for events around the state, and are replenished by a variety of locally applied taxes. In recent years, grants have become both more generous and easier to obtain.
Got a question for Texplainer? Email us at email@example.com.