With a projected $300,000 in hotel occupancy tax (HOT) funds to be accrued by the end of January, Wimberley city leaders chose to decrease the HOT rate as they decide on the best way to use the money.
By a 4-1 vote, the Wimberley city council reduced the HOT rate for hotel rooms in Wimberley from 5 percent to zero. Council member Bob Dussler voted in opposition to the measure.
Mark Bursiel, chairperson of the Wimberley HOT committee, said the committee voted 6-1 in favor of reducing the rate to zero by Jan. 31.
The decision was reached after the committee discerned the HOT collections were “far exceeding” the money being spent.
Currently, the committee has allocated $27,000 in HOT funds with $5,000 paid out. However, the city will have $266,000 in HOT funds in the bank by the end of the second quarter 2017.
However, Bursiel said the move was not meant to kill the tax, but rather to discover ways to use the money within state guidelines.
HOT funds can only be used to directly enhance and promote tourism and the convention and hotel industry. The state requires cities follow nine criteria to discern how to allocate HOT funds.
“We are taxing people who are coming to Wimberley and they are not getting the benefit from it,” Bursiel said. “Again, this is not an attempt to kill the tax or get rid of it. We want to reduce it to zero and stop collection, so we can find out what to do with it.”
Robbie Walker, owner of the Hills of Texas lodge, said over-collection of the tax has hurt lodging owners in the area.
While the city will collect $300,000 in HOT funds, he said lodging owners have lost $1.2 million in revenue.
He said businesses that are paying “the worst” are the Blair House Inn and Creek Haven Inn. He advocated for city leaders to find the best way to use the funds within state guidelines. Walker said other cities, such as Kyle and Austin, are also having similar issues.
“We’re not here to kill the tax … We’re here to say we’ve over-collected.”
Robbie Walker, owner of the Hills of Texas lodge
Council member John White said one issue relating to the collection of HOT funds is the city’s need to obtain a vision or plan and “start spending.”
White also believed stockpiling of funds makes it tempting for people to bring their proposals.
“You can always find reasons to spend money. It’s tempting for people’s proposals,” White said. “We don’t know what we’re doing with the money yet.”
Council member Craig Fore supported decreasing the rate as well. Fore said it made sense to take it down, as out of the nine criteria for spending HOT dollars, only “three or four” apply directly to Wimberley.
Bob Dussler, however, opposed decreasing the rate as it accomplished what “we intended it to do.” He said the city council is “struggling to deploy” the funds. To Dussler, the move would be akin to his analogy of the city suspending the property tax rate as they craft the budget.
“In my opinion, there’s no reason to needlessly penalize our efforts in building the pool of capital while we’re considering the best way to deploy it,” Dussler said.
Council member Gary Barchfeld said the HOT rate discussion is one of the “devisive issues we face as a city.”
“I think it’s important we get back together as a group,” Barchfeld said. “If we can help bed and breakfast, if we can help the folks generate more revenue, then I’m in favor of reducing the HOT tax to zero.”