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Troxclair: Hotel tax plan separate from Adler’s ‘downtown puzzle’

Wednesday, August 23, 2017 by Chad Swiatecki

Today’s City Council budget work session will almost certainly feature discussion about a proposal from Council Member Ellen Troxclair that seeks to reallocate money from the city’s Hotel Occupancy Tax to pay for more expenses for Austin’s parks, which she argues will free up money from the General Fund budget that can pay for historic building preservation and other community priorities.

The crux of the proposal centers around the fact that by law Hotel Occupancy Tax revenue can only be used for tourism-related expenses, such as the budget for the Austin Convention Center, marketing and upkeep of local sites that are considered a draw for visitors. Troxclair’s Option A proposal seeks to use much of the expected annual increase in HOT revenue next year to pay for $11.8 million in “parks and preservation” expenses that currently come out of the General Fund.

A resolution headed for next week’s Council meeting – co-sponsored by Mayor Pro Tem Kathie Tovo and Council members Leslie Pool and Ann Kitchen – directs city staff to prepare budget documents and any ordinance language needed to redistribute HOT revenue in the manner Troxclair has outlined.

The proposal has created something of a schism with local leaders following Mayor Steve Adler’s presentation of his “downtown puzzle” plan. Adler’s plan involves the proposed expansion of the convention center and an increase in the HOT rate to fund a variety of other efforts around the city, including increasing resources for the homeless through a 1 percent tax hoteliers would agree to impose on themselves.

Troxclair said her plan remains separate from any expansion of the convention center, which Council would need to approve, and was presented as a way to redistribute tax dollars in a way that could lead to some property tax relief for Austin residents.

“It isn’t an either/or situation because this deal would work with existing taxes and we can make progress toward goals we all think are important,” Troxclair told the Austin Monitor. “We’ll be able to use up to $13 million on parks and (historic) preservation that can get freed up from the General Fund.”

Troxclair and some of the co-sponsors of her resolution have voiced many questions and possible objections to the convention center project, from how much the $600 million project would actually increase convention center business and tourism, to what opportunities will be lost by using a 2 percentage-point HOT increase downtown instead of elsewhere in the city.

Adler has offered criticism of Troxclair’s plan, saying it would make it harder to provide funding for more homeless resources and increased money for commercial music. He has also stated he believes it would take too much money away from the existing budgets for the convention center and Visit Austin.

In a discussion on the City Council Message Board, Adler said some of the reallocation Troxclair has proposed likely isn’t legally allowed by the state statute that created the hotel tax.

“Item 60 threatens our tourism industry, which currently generates enough sales tax revenue to offset about $1,000 in taxes for everyone in town,” he wrote. “As I said above, I believe there are efficiencies and re-allocations of the Visit Austin budget that could be put to other community benefits. However, it is my understanding that the $3.3M in revenue for the Convention Center, taken away by Item 60, is pledged and not available to be re-allocated.”

Adler also told the Monitor that in response to Troxclair’s proposal he will soon introduce his resolution aimed at enacting the downtown puzzle plan, which he had initially expected to post at the end of the month for a possible vote in late September.

Also on the Council forum page, Tovo said she supports proposals to examine the use of HOT revenue and sees the convention center and downtown puzzle concept as their own separate issues.

“In my opinion, this resolution stands independent of discussions about the creation of a dedicated funding stream for services related to homelessness, a possible Convention Center expansion, a TPID (tourism public improvement district), the Waller Creek (tax increment financing), and other related issues,” she wrote. “I look forward to our staff briefing on 8/29 on those issues and hope we can begin to talk about those issues in some depth and with consideration for the range of financial options that may exist.”

Photo by Robert Lyle Bolton made available through a Creative Commons license.

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