The city council today will consider asking voters in May to weigh in on a charter amendment that would fundamentally change management of about $10 million a year in hotel occupancy tax revenue.
Council members will consider calling the referendum to seek change in a provision mandating the city give the Park Board of Trustees all revenue from 3 percent of the city’s 15 percent hotel occupancy tax. That slice of the rate generates about $9.9 million a year and is restricted to spending on efforts to market and promote tourism.
City Councilman David Collins, who along with Mayor Craig Brown put the item on the agenda, said the change was needed to make the charter agree with the state tax code.
Aside from conflicting with state law, however, the charter now forces the city to give the convention and visitors bureau, which the Park Board operates under the name Visit Galveston, more marketing and promotional money than it has been spending each year, advocates of the change argue.
Visit Galveston budgets about $6.6 million but receives $9.9 million and banks the excess, about $3 million a year recently, in what Collins called a “slush fund” from which public money can be spent without much public oversight.
Park Board leaders, however, see the proposed change as a “war on tourism” that would put Visit Galveston’s funding in the council hands, make it vulnerable to politics and hamstring efforts to promote tourism, which is arguably the island’s most important industry.
“With no clearly communicated plan or process in place for this charter amendment, the overall economic impact of tourism on Galveston Island is in question,” park board Chairman Marty Fluke said in a prepared statement Wednesday.
“As HOT is a tax on hotel rooms and paid by visitors, it is an economic benefit for residents. Tourism generates 40 percent of the property tax and 50 percent of the sales tax, reducing the tax burden on our residents.”
Park board leaders also have pointedly objected to the idea the organization’s spending lacks oversight and suggested the city would be more likely to misspend the money.
Collins, however, argued the change would not defund Visit Galveston, but would free up money that had been idle in Visit Galveston’s budget for use to build a robust means for funding arts and cultural programs in the city.
“The CVB has been doing this work for decades and it does a good job,” Collins said. “I don’t think anyone at the city wants to take any money from the CVB, but it’s not spending anywhere near $10 million a year.”
A central question, among advocates for change at least, is the intent among voters who approved the existing charter provision in 1967.
At the time, the 3 percent was expected to generate about $90,000 a year, Collins said.
“Adjusted for inflation today, that’s only $800,000 not $9.9 million,” Collins has said.
The existing charter language prevents the community from exploiting the boon of a booming tourism industry to the fullest extent, City Manager Brian Maxwell said.
“It’s like deciding you’re going to devote a third of your income to paying your water bill,” Maxwell said. “Maybe when you decided to do that it made sense, but after you start making a lot more income, it doesn’t any more.
“Nobody wants to take any money from the CVB. I’m sure that if the park board came to the council with a budget to spend $10 million it would be approved.
“This is not a money grab. Nobody is saying we should pay the city’s light bill with it or spend it on police. But it would free up money for arts and culture programs, which is legitimate spending that would benefit tourism and residents, it would enhance quality of life.”
The deadline for the city to call a May referendum is Feb. 17, Collins said.
The next election date would be in November.
Collins argued there was no legitimate reason to delay the vote. If the council defers the vote Thursday, he and other advocates on the council would call a special meeting before the Feb. 17 deadline, he said.
Galveston City Council will meet at 5 p.m. at City Hall, 823 25th St.