Lawrence City Commission to discuss spending changes in transient guest tax fund

photo by: Mike Yoder

Lawrence City Hall, 6 E. Sixth St., is pictured Thursday, July 7, 2016

City leaders will soon discuss how the city spends an additional sales tax charged to Lawrence visitors and whether some shifting of those funds to fill holes in the recreation division’s budget was appropriate.

As part of its study session Tuesday, the Lawrence City Commission will discuss its recent allocation of transient guest tax funds at the request of Explore Lawrence, the travel and tourism organization for Lawrence and Douglas County.

The transient guest tax is a special 6% sales tax charged on hotel rooms in Lawrence that is paid in addition to standard sales taxes. The city projects the tax will collect about $1.81 million next year, according to a city staff memo to the commission. The city uses the transient guest tax funds to promote tourism, and the money goes toward a grant program for local events, downtown beautification, funding for Downtown Lawrence Inc., funding for Explore Lawrence and some personnel salaries, among other expenses.

To help balance the city’s recreation fund, the commission approved some changes to how transient guest tax money will be spent in 2020. The temporary changes help eliminate the need to charge entrance fees at the city recreation centers and to close the Community Building for drop-in use, both of which were included in former City Manager Tom Markus’ proposed budget. The recommendation for the changes, which came from a special budget work group involving Mayor Lisa Larsen and Commissioner Stuart Boley, stated that the changes allow for the status quo in 2020 and give the city time to develop a recommendation for the Parks and Recreation Department’s long-term sustainability.

Those and other changes to spending from the transient guest tax fund made as part of the 2020 budget are summarized below.

• Begin charging Explore Lawrence $30,000 for the office space it uses in the Carnegie Building, which is owned by the city. To cover the rent payment, the budget calls for increasing Explore Lawrence funding from the transient guest tax fund by $30,000.

• Reduce funding for the transient guest tax special events grants program by $30,000, leaving $120,000 for the program’s 2020 budget.

• Reduce funding for Explore Lawrence by $100,000, bringing the total allocation from the fund for 2020 to $996,000.

• Shifting $51,000 for the Lawrence Cultural Arts Commission from the special recreation fund to the transient guest tax fund.

• The 2020 budget also includes a new internal service fund that distributes overhead expenses among all the city’s operating funds. The transient guest tax budget includes a total of $50,000 for administrative charges, comprising charges from the city for risk management, the central maintenance garage, finance, IT and human resources.

During the 2020 budget process, Explore Lawrence Executive Director Michael Davidson requested that the City Commission review the appropriate use of transient guest tax funds, according to the memo. As part of Tuesday’s study session, city staff will provide a background presentation regarding the tax, and Davidson will provide a presentation about the tax and the economic impact of tourism in Lawrence.

The city adopted a charter ordinance in 1994 that sets forth how the funds should be used, according to the memo. The ordinance states the funds “shall be expended for such purposes as the City Commission determines promotes, enhances, maintains, or improves the tourism, visitor, or convention business of the city.” City staff state in the memo that it is their opinion that the recommendations are appropriate uses under the ordinance provided that the commission determines that the recommendations promote, enhance, maintain, or improve tourism, visitor, or convention business of the city.

The Lawrence City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.

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