Debate over hotel-occupancy tax alarms art groups, Chamber of Commerce

Others, meanwhile, are making adjustments to safeguard their existing year-round arts programming and seasonal special promotions. 

The original proposal before City Council a few weeks ago would have siphoned some hotel-occupancy tax revenue away from arts organizations to finance a planned expansion of the city-owned Lakeside Pavilion. The idea was to attract more tourists and meetings to the pavilion and fill local coffers that way. 

However, the council this budget cycle eventually opted to continue funding for arts groups and the Chamber from the hotel-occupancy tax, but the subject will be revisited again, officials promised.

The fact the issue was ever suggested is disconcerting to incoming Chamber President Mark Mayfield, even though the proposal was defeated.

“We were alarmed by it and certainly if this is the beginning of a pattern or a trend that will take place,” he said. “The Chamber promotes this community more than anything else.  A lot of the funding that we receive to do that is through the hotel-motel tax.”

The idea to renovate Lakeside Pavilion was a sound one said Mayor Raymond Whitman, a proponent of the pavilion’s expansion.   

“One of the main things that we looked at was that we needed to expand Lakeside Pavilion and have more meeting rooms to in order to host small conventions or conferences,” the mayor said. “Right now it’s not an attractive venue for that purpose because there are no separate meeting rooms for seminars. Now, should taxpayers pay for that or should we use hotel/motel money? Before we do anything with taxpayer dollars, I think that we should use hotel motel money.”  

The state hotel/motel tax generates revenue through a per-room fee charged to local hotel guests. State law dictates those dollars are earmarked to fund nonprofit groups or facilities that promote the area and the arts.  

During the 2007/2008 budget cycle, roughly $315,000 was collected as a result of guests lodging in the city’s 325 hotel rooms. Locally, nine organizations benefited from the tax revenue last year.

At the heart of the issue is a debate about which should have higher funding priority: a venue for events or the events themselves and the marketing they require.   

Russell Buster of the Uptown Marble Arts Alliance said this should not be an all-or-nothing proposal.

“If we put all our eggs into the city convention center basket, it’s going to be some time in getting there, and in the meantime everything else is going to go dead,” he said.  “A lot of what we’ve done to increase the appeal of Marble Falls as an arts destination is going to be undermined. What also happens when they funnel this to city departments is it cuts out all of the volunteers involved in outside groups. The idea of doing it is totally counter to spreading out the civic involvement.”

The council’s decision to maintain 2008 funding at 2007 levels may have elicited a sigh of relief from the leaders of some nonprofit agencies, but others point out that funding levels have actually not changed since the 2006 cycle.   

Buster said the decision for flat funding has caused him to consider downsizing one event in order to sustain another.  

“We’re looking at scaling back the Bluebonnet Blues Festival in order to support the Sculpture on Main event,” Buster said. “All indications up until the first city workshops in late July were that we would have additional funding.  For them to back off of that so quickly really made it tough.” 

Christian Fletcher, executive director of the Chamber, said his organization has received adequate but below-average funding for the last two budget cycles. The Chamber received $133,000 last year from hotel tax revenues, which Mayfield said represents 25 percent of their operating budget. 

“Something that I think was forgotten was that the recommendation last year was to fund at the level of the year before,” said Fletcher. “It’s actually been two years since nonprofits received a funding increase. And if you look at the two last years, our costs are way up and we have to do more with far less.  The hotel tax became a target during lean financial times for city projects.”

At a time when other funding sources are drying up, the hotel-tax revenue is becoming more and more sought after. 

Barbara Bend, executive director of Harmony School of Creative Arts, is a first-time recipient of funding. She was grateful to receive $3,000 for her organization, which puts on a number of performances each year, including the Chamber Music Festival, she said.

“We had people staying in hotels who came to our event,” she said. “Last year we did it on a shoestring budget, so we’re very excited about the possibilities. We’ll be able to do a lot more than we have done. I’m thrilled to be included this year at the level that we were.” 

While those nonprofit organizations depending on hotel-tax revenues as a source of funding may have dodged a bullet this time around, the issue is likely to resurface in future budget cycles.  

“This was not an easy topic and not something we entered into lightly,” Whitman said. “When things tighten up like they are right now, you look for new ways of doing things. I think that’s where we are with this, and I think it is something that will be revisited in the future.” 

In the meantime, area nonprofits are pledging to use their funds wisely and to continue to take an active and collaborative role with the city to promote the area. 

“I look forward to continue to work with City Council to make sure that this is not something that will happen in the future,” Mayfield said. “We need to make sure that we’ll continue to help and work with each other.”