Tuesday, November 11, 2008
Getting ready for the budget showdown, Part One
I don't know if showdown is the right word, but whatever you call it, the next few weeks should be interesting as Lakewood struggles to approve a 2009 budget in a very difficult context. There was a nice story in The News Tribune that can bring you up to date. As the article says, the next meeting about the budget is tomorrow, Wednesday.
I think we will find in the Wednesday evening workshop that council members will have different ideas about what to do next with the budget. I continue to believe we have to make the tough decisions and move our general fund away from support by the gambling tax, as described below.
Meantime, a lesser-known problem with the city budget is that the majority of council members - in fact, all the others, as far as I know - have agreed to take funding that the state says has to be spent on tourism promotion and instead spend it to partially fund a staff person and consultants who would help with economic development.
In other words, as far as I know, the tentative budget knowingly misspends funds in violation of state law.
The funding would come from the taxes visitors pay when they spend the night in a Lakewood hotel. The tax is unusual in that the state specifies how the money should be spent.
Now, anyone who reads this blog knows I am a huge proponent of economic development. Economic development is good. We need jobs. We need tax revenue to pay for streets and parks and a lot more. We definitely need different sources of revenue as we wean Lakewood's budget from reliance on a gambling tax.
But I am unaware of anyone else in the state spending these hotel lodging tax funds on general city staff and economic development consultants, and state law is pretty clear that these monies have to be spent on "tourism promotion." In Lakewood, the money has traditionally gone to entities that bring in tourists, like the Lakewood Chamber of Commerce, Lakewood Playhouse, Lakewold Gardens, and the Lakewood Historical Society.
But I could be wrong about the limits. The state Auditor's Office keeps track of how cities should spend lodging tax funds. This is an excerpt from my email today to folks at the Auditor's Office:
... I am deeply concerned that our council is about to approve a budget for 2009 in which lodging tax funds are used to pay for general economic development. The funds would be used to support a portion of the salary of an economic development staff person and on consultants. My understanding is that our own city staff and other council members are justifying use of the funds by saying we will recruit hotels to town, and recruit businesses that will bring people in for overnight stays.
I have supported economic development in Lakewood for years, but I am concerned that this use of lodging tax may not fit the definitions of 'tourism promotion' as specified by the state law and as practiced by other jurisdictions.
I understand your office does not normally get involved in these situations until money has been misspent. But I would hate for Lakewood to knowingly misspend money. What advice would you have for someone concerned about the use of funding in this context?
So who knows? I could be wrong. I will let you know how this shakes out.
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I think we will find in the Wednesday evening workshop that council members will have different ideas about what to do next with the budget. I continue to believe we have to make the tough decisions and move our general fund away from support by the gambling tax, as described below.
Meantime, a lesser-known problem with the city budget is that the majority of council members - in fact, all the others, as far as I know - have agreed to take funding that the state says has to be spent on tourism promotion and instead spend it to partially fund a staff person and consultants who would help with economic development.
In other words, as far as I know, the tentative budget knowingly misspends funds in violation of state law.
The funding would come from the taxes visitors pay when they spend the night in a Lakewood hotel. The tax is unusual in that the state specifies how the money should be spent.
Now, anyone who reads this blog knows I am a huge proponent of economic development. Economic development is good. We need jobs. We need tax revenue to pay for streets and parks and a lot more. We definitely need different sources of revenue as we wean Lakewood's budget from reliance on a gambling tax.
But I am unaware of anyone else in the state spending these hotel lodging tax funds on general city staff and economic development consultants, and state law is pretty clear that these monies have to be spent on "tourism promotion." In Lakewood, the money has traditionally gone to entities that bring in tourists, like the Lakewood Chamber of Commerce, Lakewood Playhouse, Lakewold Gardens, and the Lakewood Historical Society.
But I could be wrong about the limits. The state Auditor's Office keeps track of how cities should spend lodging tax funds. This is an excerpt from my email today to folks at the Auditor's Office:
... I am deeply concerned that our council is about to approve a budget for 2009 in which lodging tax funds are used to pay for general economic development. The funds would be used to support a portion of the salary of an economic development staff person and on consultants. My understanding is that our own city staff and other council members are justifying use of the funds by saying we will recruit hotels to town, and recruit businesses that will bring people in for overnight stays.
I have supported economic development in Lakewood for years, but I am concerned that this use of lodging tax may not fit the definitions of 'tourism promotion' as specified by the state law and as practiced by other jurisdictions.
I understand your office does not normally get involved in these situations until money has been misspent. But I would hate for Lakewood to knowingly misspend money. What advice would you have for someone concerned about the use of funding in this context?
So who knows? I could be wrong. I will let you know how this shakes out.
