Reduce groups’ dependence on hospitality tax

September 2, 2012 

WHEN THE Five Points Association cleared $418,000 in profit from its wildly popular St. Patrick’s Day festival in 2007, we said Columbia should stop funding the event through accommodations and hospitality taxes.

That wasn’t a swipe at the Five Points party; it was a recognition of its success. And with its success, City Council should have redirected the money donated to the festival — $232,000 that year — to help struggling groups and tourism-related efforts that needed it. Yet the festival still receives taxpayer funding.

That needs to change, for it and other successful ventures. As City Council considers a long-overdue overhaul of the way it doles out money from the hospitality tax — a 2 percent levy on prepared foods and beverages — it should adopt a simple philosophy: Keep the public donations modest. If an organization or event can’t make it on its own, then it should be ended. Those that become self-sufficient, establish a brand and make a profit should see their public contributions reduced and eventually ended.

It’s also imperative that the city steer this money, restricted to tourism-related projects, to appropriate groups. It has not always done so. And while the focus is on restaurant-tax revenues, the same philosophy should be applied to accommodations-tax dollars as well.

With hospitality-tax revenue finite and funding requests endless, it only makes sense to change the allocation process so the money is put to the highest and best use.

The city collected a little less than $9 million in restaurant taxes last fiscal year; after allocations to large agencies such as the art museum, there was roughly $5 million left to donate to other entities. Of that, $2.8 million was available for arts groups, festival organizers and others seeking help to put on shows, advertise and pay for events, employees or other costs. Their requests totaled $8 million.

For some time now, we — as well as some past council members — have questioned how this money is allocated and monitored and its effectiveness. Fortunately, some current council members also are asking what kind of return the city receives on the millions it invests in these groups and events year after year. The council is considering hiring consultants to analyze contributions made to 100 or so groups.

Some on the council rightly worry that some organizations are too dependent on the money and would not exist without it. Sure they are; and the council fostered that dependency over the years.

Nothing illustrated the organizations’ dependence on the money more than some festival organizers’ panicked reaction when the council waited a month later than normal to distribute hospitality dollars. One organizer said her group had already staged its event but that if it did not receive the $7,500 a citizens advisory committee recommended to offset expenses, “Our organization will pretty much be at zero.”

We’ve never liked this tax, but if Columbia officials insist on retaining it, the least they could do is manage it well so that the city, and organizations that receive funding, don’t reach the point that they can’t survive without it.

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