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City’s hotel tax on the upswing after pandemic

Wednesday, February 1, 2023 by Nina Hernandez

The city’s Arts Commission heard an update last week on the status of the Cultural Arts Fund and Hotel Occupancy Tax collection numbers for the first quarter of Fiscal Year 2022-23. After a rough showing during the pandemic, there are signs the revenue source is again on the rise.

The Hotel Occupancy Tax – the revenue the city makes from taxing hotel stays – rose dramatically from 2010 to 2019. The funds are used to promote tourism and the hotel industry, and mainly go toward expansion of the Austin Convention Center. The city has also allocated percentages to certain cultural heritage projects, including the Cultural Arts Fund. While that growth disappeared during the pandemic, it appears to be turning around.

At the Arts Commission’s Jan. 23 meeting, staff reported on the status of HOT collection as it relates to the Cultural Arts Fund, which contracts with and supports local arts organizations. At this point in the first quarter of FY 2023, Austin has collected $35 million in Hotel Occupancy Tax. That’s 43 percent higher than where the city was at this point in Fiscal Year 2021-22.

That has real impacts on the Cultural Arts Fund account. Laura Odegaard of the Economic Development Department told commissioners the city collected a total of $223,227 of HOT revenue during December 2022. Of that figure, $21,319 was slated for the Cultural Arts Fund.

The Cultural Arts Fund has an approved budget of $10.3 million for the fiscal year and currently sits at $3.4 million. The city collected $2.6 million in October 2022 and $772,000 in November 2022. This time last year, the Cultural Arts Fund was at $2.4 million.

The city’s HOT fund budget is forecast by the convention center, because it is the entity charged as the holder of the fund by the state. The center provides updates to the various divisions receiving funds throughout the year so that they can make adjustments if needed. Staff told commissioners there hasn’t yet been an update this fiscal year.

Last year, the city worked to revise its process for determining how Cultural Arts funds are awarded, with an eye on equity and inclusion. The city’s Live Music Fund, which would also use HOT dollars, is slated for a City Council vote this month.

Photo by Dtobias, CC BY-SA 3.0, via Wikimedia Commons.

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