Pepper suggests cap on Tourism funds

Aug. 11—Decatur City Councilman Hunter Pepper brought back the controversial idea of capping Decatur-Morgan County Tourism's portion of lodging tax revenues on Monday, while the City Council is likely to return to 2019 funding levels in its fiscal 2022 appropriations for agencies and nonprofits.

Chief Financial Officer Kyle Demeester presented proposed fiscal 2022 appropriations of $3 million, with council members making three suggested increases totaling $52,500 in Monday's work session. The total is just higher than fiscal 2019 and an increase over the $2.69 million budgeted in fiscal 2021.

The council annually provides an allocation for a handful of nonprofits and other agencies that provide services deemed to benefit the city.

The budget shows an increase for the tourism bureau from $643,000 in fiscal 2021 to $903,000 in fiscal 2022. Tourism annually receives 64.3% of a 7% lodging tax.

"Tourism does a wonderful job, but I feel like there needs to be a cap there," Pepper asked. "There needs to be a place where we stop them from getting so much. I feel like $900,000 is a lot of money."

Pepper said Tourism "needs to show proof of the return on investment" that it's providing for the city. He also pointed out that the bureau's portion of the lodging tax revenue, which comes from the city only, makes up 93% of its budget.

"I feel like Tourism needs to find help on revenues from other sources," Pepper said.

This is not the first time a council member has suggested capping Tourism's portion of the lodging tax revenue. Then-Councilman Chuck Ard made the suggestion in 2017 and 2018, but the idea went nowhere because of opposition from the council, Tourism officials and Decatur-Morgan County Hospitality Association members.

The Hospitality Association, a group representing the city's hotels and motels, originally pushed the city to start the lodging tax with the aim of using the revenue to promote tourism.

Tourism President and CEO Danielle Gibson said tourism numbers compiled by the state show that the city and county received a return on their investment.

The Alabama Tourism Department, according to information sent out by Gibson in June, estimated that travelers spent $239 million and were responsible for 2,557 jobs last year in Morgan County.

That figure represents a 14% decrease in traveler spending on hotels, restaurants, shopping and transportation, a drop Gibson attributed to the pandemic.

Gibson said her bureau is one of the reasons the city hosted the USA Archery tournament, President's Cup soccer tournament and multiple bass tournaments this year.

"We do a lot for the community and economic growth," Gibson said.

Gibson said her group also does a lot to convince local industries to have their visitors "stay local." This includes a new project in which interns at industries are provided information about the advantages of living in Decatur and Morgan County.

Gibson said it's not fair to look at the increase from fiscal 2020 to 2021 because the coronavirus pandemic had a major impact on tourism and travelers, especially during the two-month shutdown, and depressed revenue.

She said fiscal 2021 is trending to stay on schedule with 2019, when Tourism got just over $1 million after budgeting for $935,250. The actual revenue as reported by Demeester on Monday shows Tourism at $556,101 through June 28.

"We're getting closer to 2019, with the President's Cup and USA Archery," Gibson said. "The fishing tournaments look different, and children's sports are touch-and-go, but we're having a pretty good year."

Council President Jacob Ladner and Councilman Kyle Pike said more conversations are needed before there's any consideration of capping Tourism's portion of the lodging tax revenues.

"Their allocation is meant to reinvest into marketing and tourism," Ladner said. "... That tax is not for the city getting a bunch of money."

Pike said he is open to a discussion in the future about lodging tax revenue but "it would be cutting off their legs" to cap their funding when they've begun planning fiscal 2022 expenditures. Gibson said Tourism, like the city, budgets for a fiscal year beginning Oct. 1.

Councilman Carlton McMasters said he doesn't think the time is right to discuss a cap on the Tourism funding.

"There may come a time when we need to have that conversation," McMasters said.

Pike said the budget process isn't the time to discuss a possible limit on Tourism's funding, and Mayor Tab Bowling agreed they should wait until after the new fiscal year starts to discuss lodging tax revenues.

"I would hate to cut their legs out from under them," Bowling said.

Ladner made two suggested changes to the appropriations. He said he would like to increase the Decatur-Morgan Seniors Council appropriation from $24,000 to its $55,000 request because the organization is trying to recover from the impact of last year's pandemic.

Pike said he would also like to increase the Princess Theatre Center for the Arts to $80,000 from $68,500, the amount Demeester budgeted.

"The Princess is a staple for our community," Pike said. "It takes a lot to hold the programs and attract the acts that people want to see. I think we need to do anything we can to support the Princess."

Pepper said he agrees with the increase for Princess, which he called "iconic."

Pike said he would like to increase Decatur Downtown Redevelopment Association by $10,000 to $84,100. He said DDRA has been effective in its continued efforts for the growth of downtown.

Once again, the City Council did not approve any of the requests from nonprofits that have not received appropriations in the past. This includes Hands Across Decatur, which asked for $50,000, Hudson-Alpha Foundation, which sought $12,246, and Orchestra Sul Ponticello of Decatur, which requested $15,000.

The council in fiscal 2021 allocated $200,000 to four child-centered nonprofits from the share of sales taxes Decatur City Schools normally receives. The council usually gives DCS one-fourth of the city's 4% sales tax, but the school system agreed with the change last year and the council approved the same allocation for fiscal 2022.

— bayne.hughes@decaturdaily.com or 256-340-2432. Twitter @DD_BayneHughes.