Leaders of some nonprofit arts and tourism groups say their operations are struggling eight months after the city changed the way it distributes marketing money collected through hotel taxes.

Members of the Galveston City Council, however, argue the change will allow for spending on more lasting public art projects and for preservation of historic buildings, and that the nonprofits are using skewed numbers to make their case.

The money at issue is collected through hotel occupancy taxes and distributed by the Arts and Historic Preservation Advisory Board. It must be used for marketing programs that enhance the arts or draw tourists to Galveston.

The Cavalla Historical Foundation, which runs the Galveston Naval Museum, is an example of a group financially hurt by the change, Kimber Fountain, chairwoman of the advisory board, said.

In 2016, the foundation received more than $28,000 from the advisory board, she said. The nonprofit during the 2017-2018 received only about $12,800, a 54 percent reduction, she said.

The city money was important to the group’s operations and the cut had been felt, a foundation official said.

“It enables us to compete in this highly competitive marketplace for tourists,” foundation Chairman Gary Bell said.

Marketing is important for the naval museum, because the organization relies on admissions to fund operations and ship restoration, Bell said.

“We have to take the money from those funds to put it in advertising and promotion to make sure that we have the number of visitors that we need,” Bell said.

Passed last year, the ordinance eliminated the board’s ability to allocate from a pot of money forfeited by organizations that didn’t meet requirements for funding, Fountain said.

After the change, any money the advisory board has left over goes into a reserve fund, according to the March 22 ordinance.

“All the members and myself were strongly opposed to the reserve fund,” Fountain said. “We are not an entity that has operating expenses. That money is better used.”

In 2016, the board gave out more than $100,000 to nonprofits from the forfeit fund. That amount dropped to just $5,000 during the 2017-2018 fiscal year, Fountain said.

The change will allow the city to fund more brick-and-mortar projects, Mayor Jim Yarbrough said.

“We spend nothing on that,” Yarbrough said. “We’ve got some groups hitting the edges but they’re scraping and scraping and fundraising.”

The March ordinance also allocated $50,000 annually from the board toward public art, according to city documents.

Projects could also complement council efforts to beautify the area north of Broadway and attract tourists to Galveston, Yarbrough said.

The board supports funding public art, but wants the city to find other money to pay for it, Fountain said.

The Galveston Children’s Museum, 2618 Broadway, began receiving funds from the board a few years ago, Executive Director Nancy Schultz said.

“To be able to promote your event or to promote our little museum is very important,” Schultz said.

The museum is developing a marketing strategy and the funding change has left that in question, she said.

“It limits the direction we hope to go,” Schultz said.

The city wants to support nonprofits, but organizations shouldn’t rely on extra funds like the forfeited money, District 3 City Councilman David Collins said.

“The unfortunate thing is many organizations get used to having this extra funding and then are surprised when it doesn’t happen the next year,” Collins said.

Likewise, the 2016 allocations that the groups are using to make their case are skewed, District 2 City Councilman Craig Brown said.

The board that year allocated $186,000 in grants to nonprofits, but $100,000 of that was money forfeited in past years, Brown said.

That was a fluke, he said.

Numbers from the city secretary show nonprofits received a total of $67,000, less than half the 2016 allocation, in both 2014 and 2015, he said.

Brown said he supported efforts to beautify the city with public art, but also considered the reserve fund to be a hedge against downturns in hotel tax revenue, such as can happen after a hurricane.

Keri Heath: 409-683-5241; or on Twitter @HeathKeri.


(1) comment

Charlotte O'rourke

Kudos to the city council for understanding that the tail shouldn’t wag the dog.

The city council makes ultimate decisions on HOT funds and has been giving about $1.5 million annually to nonprofits.

I agree with the mayors statement about some of the money being used for building brick and mortar CITY projects.

The city shouldn’t have to use other funding sources like the general fund to pay for its own arts and preservation projects.

Heber Taylor had an excellent editorial “Park Board Wrong on HOT tax use” on this subject in 2007. Better late than never to know you, the city, are the dog and NOT the tail, and instead of giving all HOT funds away to others that you can legitimately find uses for some of these funds.

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