Lincoln aldermen debate the use of motel tax revenues
More money for city parks and less for the Logan County Tourism Bureau
 

[July 01, 2022] 

The Lincoln City Council held its committee of the whole meeting on Wednesday, June 29th, due to the Election Day. Two members of the council were absent for the evening, Wanda Lee Rohlfs and Tony Zurkammer. The council spent the first seven minutes of the meeting discussing seven topics. Then it spent the next hour discussing the eighth and final topic of the evening, the revenues obtained via the hotel/motel tax.

The hotel/motel tax is collected directly from motels located within the city limits of Lincoln. Currently 95 percent of the revenues collected are funneled through to the Logan County Tourism Bureau (LCTB).

The LCTB uses that funding, plus an annual state grant issued through the Illinois Department of Economic Opportunity Office of Illinois Tourism to promote tourist attractions, activities and events within the county. The LCTB must be certified by the county as operating to promote tourism within the entire county in order to maintain the state certified status as a tourism bureau.

Prior to 2013 a local hotel/motel tax was paid directly to the county by motel owners/operators throughout the county. Within the county at that time, all the tax money collected was coming from Lincoln motels except for one motel located in Atlanta and one located in an unincorporated area of the county.

In 2013, the city moved to take over the taxes collected from Lincoln motels and was successful in doing so. The first year, the LCTB received 80 percent of the tax money and the city kept 20 percent to use as it determined fitting and proper for the support and promotion of tourism activities in the city exclusively.

Since that time, through various adjustments by the city council, the amount passed through to the LCTB has increased to 95 percent of the total tax collected.

This week, Aldermen Zurkammer and Rick Hoefle presented a memo to the council, seeking to make amendments, not in the amount passed through to the tourism bureau, but in the manner in which the city expends its five percent share of the tax funding.

With Zurkammer absent, Hoefle spoke about the memo and the subsequent request. He said that he has historically not been in favor of the city granting funding to tourism activities, and would like to see the city do away with the various grants it gives to different entities, and focus that amount of the budget onto improving parks and other physical destinations within the city and funding the Third Friday events.

He noted the following tax expenditures in the 2022-23 budget:
 

Pass through to tourism	$199,580
Tropics sign	2,300
Balloonfest	2,000
Railsplitter Festival	1,500
Logan County Genealogical & Historical Society	1,500
Add’l tourism projects	20,000
Timber Frame Pavilion	3,400
Picnic table replacement	0
Dock Dogs	2,000
Third Friday	6,000
Total	$238,280

The suggestion from Hoefle and Zurkammer included amending the budget to the following:
 

Pass through to tourism	$199,580
Tropics sign	2,300
Balloonfest (funded by ARPA for three years)	0
Railsplitter Festival (funded by ARPA for three years)	0
Logan County Genealogical & Historical Society	0
Add’l tourism projects	2,000
Timber Frame Pavilion	3,400
Picnic table replacement	0
Dock Dogs (funded by ARPA for three years)	0
Third Friday	6,000
Total	$213,280

It was then suggested that the $25,000 taken out of the budget be put back in under a new line – City Park Upgrades/Maintenance/Picnic Tables. He contended that the parks do need improvement and the money should go to that. He also noted that with the city giving out grants, there will be people who come to the city and get what they ask, but at some point someone may come to the city and not get what they ask. Then, the city would be leaving itself open to being accused of favoritism.

Kevin Bateman agreed that there was a need for money for improvements to parks, but he also thought that perhaps the city could give the LCTB less money and keep more for the city parks. He suggested that the split could go from 95-5 to 70-30 with the LCTB getting 70 percent of the total revenue.

He said there were other projects in the city that could use the money and that it would be “free money” to the city, as in not from property taxes and not taken out of the general fund budget.

Steve Parrott said that if the city took money away from the tourism bureau, then that entity would have less money to invest in promoting activities and events that generate overnight stays at local motels.

Sam Downs asked about where Hoefle got his figures. Hoefle replied that it was what was estimated in the budget this year. He added that the figure may be too high because with Lincoln College now closed there will be no graduation weekends in the future and also no basketball tournaments, all of which generate motel stays.

Hoefle commented that if the city dropped the LCTB funding down to 70 percent then “tourism is out of business.” He added that even a 10 percent reduction would hurt the bureau.

City Treasurer Chuck Conzo reminded the council that the agreement with tourism has been signed for this year at a rate of 95 percent, so what is being considered would be for the next budget year. He said that he had sent out an email to the council about funding for events by the city during the budgeting process and had increased one line from $8,000 to $15,000 for that purpose. He had asked for aldermen to respond so the committee could know the feelings of the council and no one did.

Conzo said he was in favor of flexibility within the money the city was already receiving but concluded in regard to reducing the LCTB share “What we’ve done in the past works well, if it isn’t broke, don’t fix it.”

Hoefle commented to Conzo that he (Conzo) is not an alderman but was talking like one. Hoefle said that if the city continues on as is, the council will see more and more people coming for money.

Bateman said maybe the 70-30 split was a bit steep, but he would still be in favor of keeping a larger portion of the motel tax revenue for the city.

Parrott said that it sounded like the city was going in the direction of a “tourism commission,” but there is already a tourism bureau so why should the city have a commission?

Downs said he agree with “most” of what Bateman had said and added that it was Lincoln’s money and he didn’t want to just give it away. He said he would rather spend motel tax money than city money.

It had been noted that the money from the motel tax belonged to Lincoln anyway because Atlanta collects its own motel tax and that is the only other town with a motel. Hoefle had argued that point saying that the money was earmarked to be spent for promoting tourism throughout the county, not just Lincoln.

City Attorney John Hoblit was looking into the Illinois code on hotel/motel tax and reported that according to 65ILCS 5 / 8-3-14a(d) all the money the city collects from the tax must be expended on promoting tourism within the city.

Bateman said then the LCTB should not be giving the money to other communities. He said he did not want to see the bureau fail but he still wants more money for parks and this is a good place to get it.

Parrott said that the LCTB is a county bureau and is certified by the state as such. With that certification the bureau earns grants from the state. If the LCTB became exclusive to Lincoln then it would lose that bureau certification and the grant money.

Mayor Tracy Welch had listened to all the discussion, then said he wanted to now offer his opinion on the matter.

He began by saying that in regard to Conzo, as the City Treasure he is a “trusted advisor” to the city and felt he should be treated as such.

Welch said in regard to the motel tax, yes, indeed the money does belong to the city. He said the city took it from the county in 2013.

Welch said, “What we’re doing is continuing to make a mess here.” He said he felt like the only reason this was up for discussion now was because two entities had come to the city seeking money for their events. Had that not happened the city would have continued on as it has been. He added that yes the LCTB is supposed to serve the whole county, and he feels it is not fair that events in the Lincoln community have to compete for funding with events from other communities. Welch also noted that based on the statue read by Hoblit, “we’ve been doing it wrong all along.”
 

Discussion continued on about the state grant and how it was used by tourism. The council was told that the majority of that grant is spent on blanket advertising that promotes Logan County on the whole as a tourist destination. It was noted that there are currently no individual event grants given out of the state money, but it could probably be done that way if needed.

Hoefle added that what the LCTB spends in grants primarily goes to Lincoln anyway because Lincoln is where the festivals and events are held. Additionally, he said that the percentage of money going to grants is small. Most of the money is spent on maintenance, advertising and salaries. He noted that the LCTB had met in June and learned for example that it will have to pay $20,000 for wear and tear repairs on the Railsplitter Covered Wagon. It is also working to keep the Mill in good shape and adding to it. He punctuated his comments saying both the wagon and the Mill are in city limits, and the money used is motel tax earned in Lincoln.

As the conversation began to wind down, Bateman said perhaps it would be better to leave the motel tax split at status quo for the time being. Hoefle thought it would be good to postpone any further discussion at least until the next committee of the whole, when Zurkammer could be present to express his views as well.

Welch thought rolling the topic to the next committee of the whole was a good idea. He also said that speaking as the mayor with no vote in the matter, he has “no desire or interest to disrupt the tourism bureau.” He added that the LCTB is a “well-oiled machine that works.”

Bateman said he didn’t want to hurt the LCTB either, but the city parks need attention and the motel tax is free money.

Parrott said he was on the council and on the LCTB board, but “(I) have no dog in the fight as far as events that I run.” He said he was in favor of re-designing the five percent the city gets now to reflect that the city will not fund events.

At the end it was decided to roll the topic into the next committee of the whole and give all the aldermen a chance to think about the topic.

[Nila Smith]

65ILCS 5 / 8-3-14a(d)
(d) The moneys collected by a municipality under this Section may be expended solely to promote tourism and conventions within that municipality or otherwise to attract nonresident overnight visitors to the municipality. No moneys received under this Section may be used to advertise for or otherwise promote new competition in the hotel business.