Lagging hotel tax receipts concern city

Columbia accommodations taxes, paid by people who stay in the city's hotels, were down 12 percent in the first quarter of this fiscal year, prompting some city officials to question whether the city can meet its obligations to two major tourism organizations.

The Columbia Metropolitan Convention and Visitors Bureau is scheduled to receive $1 million from accommodations taxes this year, while Capital City Lake Murray Country is scheduled to receive $150,000.

But with collections down so much in a quarter - from July to September - that historically has been one of the city's highest revenue producers, Columbia's interim finance director is projecting the city could be $40,000 short by the end of the year.

"That's my crystal ball," Bill Ellis said. "It may be nothing. We may end up with a turnaround in the third quarter."

Columbia has cut its budget drastically this year, including by reducing staff at some fire stations, cutting garbage pickup for Dumpster-like containers and laying off employees and reducing their holiday pay.

With a potential deficit looming in the accommodations tax fund, City Council members said Wednesday they are taking no chances. Instead of giving the organizations their money up front, council members decided to release the money only after it has been collected on a quarterly basis.

"I think we need to move forward very cautiously," Councilman Kirkman Finlay said.

A $40,000 shortfall out of a $1 million allocation might not sound like much, but Ric Luber, president and CEO of the Midlands Authority for Conventions, Sports and Tourism, said he would have to reduce funding for the authority's popular "Famously Hot" ad campaign in the event of a shortfall.

"Any advertising that is not in front of the customer is one customer we may not have coming to the community," Luber said. "It's going to have an impact."

Attempts to reach Miriam Atria, president and CEO of Capital City Lake Murray Country, were unsuccessful.

Columbia officials collected $348,919.38 in the first quarter of the 2009-10 fiscal year, Ellis said. That's $47,965.41 less than the city collected in the first quarter of the 2008-09 fiscal year. Columbia's fiscal years run from July 1 to June 30.

This is the first time the city's accommodations tax has been affected by the slumping economy. Luber said Columbia is considered a "value destination," meaning it is less expensive for groups to hold meetings in Columbia than in other S.C. destinations, such as Charleston.

"But those destinations have been lowering their prices, which takes away our competitive edge," Luber said.

Last year, Columbia averaged a 64 percent occupancy rate for the city's hotel rooms. This year, through August, the occupancy rate was 58 percent.