Spokane Valley council watching state on lodging taxes

Lodging tax funds were a focal point of the Spokane Valley City Council’s winter retreat on Tuesday.

A clause in state law that allows lodging tax money to be spent on festivals and operations for nonprofit organizations involved in tourism expires this year, and the Association of Washington Cities has introduced bills in each chamber of the Legislature to allow those uses to continue.

Amendments to the Senate bill redefine tourists as people who spend the night in a hotel/motel or travel more than 50 miles from home, and restrict city councils to awarding money to only those organizations recommended by their Lodging Tax Advisory Committee.

The second amendment was questioned by Mayor Tom Towey. For the past two years, Spokane Valley’s advisory committee has not recommended giving funds to Valleyfest, but the council has given the group money anyway.

“I don’t know that it would benefit this council to have a mandatory dispersal of funds,” Towey said. “I don’t even know if it’s legal.”

The committee is an advisory committee, Towey said. The council needs to have the final say in who is awarded money, he said.

“I think it’s completely wrong for the state to mandate how we spend our money,” Councilman Dean Grafos said.

Festivals get a pretty small percentage of the total money available and some cities count on that for popular events, Grafos said. “All the communities are different,” he said.

Councilman Arne Woodard echoed Towey’s concerns. “I don’t want to lose our autonomy,” he said. “I’m not for that portion of the law.”

Towey also expressed concerns about the proposed definition of a tourist, which leaves out people who come for the day to shop, eat out and do other activities. “That figure we don’t have, we will never have,” he said. “But it’s a very important part of our tourist industry. We should leave them in the equation.”

Councilman Ben Wick said that while the proposed changes might be unpleasant, the most important thing would be that cities could continue to spend money on festivals and operations of nonprofits involved in tourism. “We need to protect the flexibility we have with those funds,” he said. “I see that as a bigger hamstring to this council and future councils.”

Towey suggested changing the city’s award process by dividing lodging tax money applicants into different categories – a category for the city, one for large regional organizations that focus exclusively on tourism and one for smaller, local organizations that also draw tourists. “I think it’s unfair, for instance, for the (Spokane Valley Heritage) Museum to compete with Visit Spokane,” he said.

The city could allocate a certain percentage to each category, which could provide more certainty for agencies that request funding every year, he said. “They have a budget just like we do,” he said.

The third category would include organizations like the museum, Valleyfest and the Valley Hub, Towey said. “I think it would take away the animosity,” he said. “I think it would be fair to everybody.”

Councilman Chuck Hafner said he agreed that the process of awarding funding had been very negative in recent years and that Towey’s suggestion might be a solution. “We would have to define what we mean by local,” he said.

Woodard suggested adding Valleyfest to the city’s budget as a line item. “If it is indeed our festival, why are we not supporting it? We need to own part of it with constant support.”

Towey said he was hesitant to add any nonprofit to the city’s budget. Hafner said doing that might make other nonprofits request to be made a part of the city’s budget, too. “If we put in a line item, are we not taking ownership of that organization?” he said.

The council agreed to keep an eye on the state bills and weigh in if necessary. The city can’t move forward with any reorganization of how funds are awarded until the Legislature makes a decision, Towey said.