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City HOT funds receive more scrutiny

By Judith Pannebaker BCC Editor

Somewhat heated discussions during the Thursday, March 1, meeting of Bandera City Council centered on the municipality's current HOT funds - or rather the lack of them.

By law, hotels, motels and B&Bs located within the city limits must collect the Hotel Occupancy Tax - the so-called HOT funds. The levy, often irreverently referred to as the "heads in beds" or "butts in beds" tax, is imposed on visitors staying overnight in the various facilities.

The Comptroller for the State of Texas collects the taxes from the hostelries and then returns a percentage of the collected taxes to the City of Bandera for eventual dispersal.

Annually, sponsors of various celebratory weekends in Bandera request funds specifically for augmenting their advertising budgets.

Governed by Texas law, HOT funds can only be used for specific types of advertising. For a complete summary of Chapter 351 of the Texas Tax Code, dealing with Municipal Hotel Occupancy Taxes, visit http://www.statutes.legis.state.tx.us/Docs/TX/htm/TX.351.htm.

Tourist-centric festivals that receive HOT funds from the City of Bandera include the Wild Hog Explosion, benefiting the Bandera County Public Library; RiverFest, benefitting the Bandera Business Association; National Day of the American Cowboy, benefitting the Frontier Times Museum; and Celebrate Bandera, benefitting the Bandera Regional Foundation.

In 2010, city council also approved, by a 3-2 vote, giving Mike Murehead of the Bandera Film Commission $3,000 for his 45-minute promotional video "Bandera Silent Stranger." With the exception of Murehead's project, all other recipients were nonprofit organizations.

During the March 1 meeting, event coordinator Genie Strickland asked for $1,500 for the Wild Hog Explosion, slated for Saturday, March 17, at Mansfield Park off Highway 16 North.

City Treasurer Ernie DeWinne told council that the hotel-motel occupancy tax account has $2,000 in it. "So, technically, we have the funding," he said. "The next payment is due April 30."

Mayor Horst Pallaske's philosophy of "If we have it and they ask for it, we should give it to them," didn't sit well with other council members.

"Previously, we decided that everyone would get 60 percent of the requested amount," DeWinne reminded Pallaske.

Councilman Binky Archer said, "Other funding has not been forthcoming for the museum. 'First come, first served' is what we agreed on."

Strickland noted - incorrectly as it turned out - that last year the museum had requested and received $2,500 for the Day of the Cowboy celebration. "You have two more quarters (of HOT fund allocations) before the Day of the Cowboy in July," she told council.

"Last year, the museum requested $5,000 from the HOT funds and received $2,500," said James McGroarty, who headed up the marketing committee for the western celebration. "We made up the 50 percent difference through private sponsors, but this year those sponsors are not here. We don't have any other funding."

Pallaske reiterated, "We can't sit on the (HOT) money."

Councilman Nancy Montgomery noted, "The Day of the Cowboy needs funding now to spend on advertising before the event." She recommended giving museum board members the 60 percent of their request.

"We have $2,000 in this fiscal year. It could be bad if you give away the fund balance," DeWinne said. "Once it's gone, it's gone."

"You want reserves, but we don't want to sit on it," Pallaske continued.

Mayor Pro Tem Maggie Schumacher suggested giving the Wild Hog Explosion 60 percent of their request as was previously agreed.

Strickland pointed out that representatives from the Frontier Times Museum had breached protocol by requesting HOT funds out of order of their event. However, when funds were requested for the 2011 Day of the Cowboy, council told representatives to come earlier in 2012 to ensure HOT funds were still available - which they did.

Strickland noted that last year, when she asked for HOT funds for Celebrate Bandera, the funds were paid out in increments. "We're willing to work so everyone gets a fair share," she said, advocating that the funds be used wisely and spread out among the requesting entities.

To forestall future protocol breaches, Schumacher recommended that all requests for HOT funds be made to city council at one time, possibly during the informal budget workshops. "That way we could look at the other funding and resources available to those requestors."

Council is also exploring the use of an application form.

Noting the city has less money to give away in previous years, the assistant municipal attorney said that she had discussed Bandera's current method of dispersing of HOT funds with other attorneys in the firm.

To Archer's comment, "We have to look at the big picture and see the funding that's available up front," Pallaske noted that the city had been experiencing difficulty collecting the hotel-motel occupancy taxes.

DeWinne noted that last year, the city gave out HOT funds totaling $37,000 when only $25,000 had been collected. "You ate the seed corn," he said. "You can't give away at the same level unless the tax revenues increase." Regarding late tax payments, DeWinne revealed, "There was a $4,000 delinquency last year and another $4,000 in arrears from the first two quarters of this fiscal year."

Pallaske noted, "These people who are not paying should realize they are not hurting the city, but they are hurting people who are trying to get something done."

"We have certain people who pay the tax and certain people who don't pay and I'm talking to the comptroller's office about that right now," DeWinne said.

After discussions ended, the Wild Hog Explosion received the requested $1,500 in its entirety as opposed to the 60 percent funding level.

Meanwhile, the Frontier Times Museum was promised $3,000 for their National Day of the American Cowboy event "the next time."