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Task force to investigate HOT tax spending

Monday, August 22, 2016 by Cate Malek

City Council will spend the coming weeks looking into whether Austin’s Hotel Occupancy Tax (or HOT tax) should continue to be used only for tourism, or if there are better uses for the rapidly growing tax revenue.

At their meeting on Aug. 18, Council members unanimously passed a resolution to form a task force to look into new uses for the tax. They looked specifically at the HOT tax revenue that goes to the Austin Convention & Visitors Bureau budget, which continues to grow significantly despite the fact that convention attendance accounted for only 2 percent of all visitors to Austin in 2014.

“If we start to bring in more revenue as a city, it doesn’t mean we should necessarily spend more,” said Council Member Delia Garza. “There’s got to be a point where we make a decision on how that spending happens.”

The HOT tax is predicted to generate $90 million in the next fiscal year. That money has traditionally gone to the Austin Convention Center, the ACVB and the Cultural Arts program. But Council members are asking for more control over how that money is spent.

Looking at just the ACVB, funding went from $6.6 million in Fiscal Year 2011-2012 to $16.4 million for FY 2016-17, city staff said at the meeting. The reason for the jump is that hotels have done well in past years, and the ACVB receives a set percentage of the tax revenue.

Tom Noonan, president of the ACVB, argued that the bureau needs the increased budget to continue to promote Austin in a competitive national market and to fulfill its commitments for conferences and events already planned in the next five years.

Council said it wants to honor those commitments but will begin to investigate how the ACVB budget is spent and whether it’s necessary to keep investing in tourism so aggressively.

To this end, Council’s task force will be made up of members from different interest groups citywide, including members representing the music industry, the hotel industry, public safety, preservation and other areas.

Council acknowledged that the HOT tax is a complicated subject and that the task force’s work will be challenging. But Mayor Pro Tem Kathie Tovo said that shouldn’t prevent it from airing out the issue.

“I’m certainly not trying to make the ACVB or the Convention Center’s job more difficult,” said Tovo. “But we have some challenging circumstances here in Austin that we could use … some of the tourism and promotion fund revenue to address, from music venues to historic preservation opportunities to other things.”

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