Hutchings-SealyStewart TitleShean MoodyStrandYagas
Galveston Economic Report
David Stanowski
David Stanowski Publisher

The Blog


Park Board Needs Help!
by David Stanowski
01 June 2009

The Park Board, and other City functions, are under a budget strain due to the plunge in the amount of Hotel Occupancy Tax (HOT) being collected! Most of the drop in collections has been due to the number of hotel guests who have been granted an exemption from paying HOT. The question is, have these exemptions been granted correctly?

The City of Galveston receives 9% of taxable hotel receipts, plus another 2% of the State share of HOT for a total of 11%. The actual dollar amount received is dependent on the amount of money that is spent at local hotels, and the percentage of the total revenue that is exempt from taxation.

Since Hurricane Ike, hotel revenues have remained fairly strong, but the amount that has been exempt from taxation has soared, which has really hurt collections.

One of the categories exempt from the HOT is stays of over 30 days. The number of customers staying in hotels more than 30 days is somewhat seasonal. Examination of first quarter data,
when it is more likely to have longer stays, because it is the off season, from 2001 to 2008, finds taxable revenue running between 87% and 90%. Third quarter data, which is during the high season, from 2001 to 2008, revealed a range of 87-96%.

The following graph shows just how much the taxable revenues collapsed after the Hurricane. They hit bottom and recovered to a large degree, but they are still too low which is putting the squeeze on HOT collections.

Notice how the plunge in September and October 2008 in the percentage of total receipts that were taxable (see graph above) resulted in a collapse of Dollars collected 67% and 63% below the amounts received a year earlier (see graph below)! This is blowing a hole in the Park Board budget!

Galveston Hotel Tax Year Over Year Rate of Change
Source: City of Galveston

The graph of actual Dollars collected shows the plunge from the July peak into the September and October lows. Will 2009 collections return to the highs of Summer 2008?
Galveston Hotel Tax Collected
Source: City of Galveston

The graph of the monthly HOT collected between 2004 and 2009 is shown below on a rolling 12-month basis. This measure of the annual amount of collections was rising into the point where Hurricane Ike hit the City, and the current challenge is to find a way to recover from the $1.66 million dip!

Galveston Hotel Tax Collected 2004 to 2009
Source: City of Galveston

Reportedly, government employees do not pay the HOT, as well as guests staying in a hotel longer than 30 days, but there have been conflicting accounts about which hotels having been charging HOT, and which have not, using a variety of confusing and inconsistent criteria. The March data still shows that only 78% of hotel guests were paying HOT, which is far too low to fund the Park Board and other City activities. Ideally, June, July, and August need to see rates back up to 91-96%.

The Park Board, Hotel & Lodging Association, and the City Finance Director have made many efforts to sort out this problem, but they continue to run into political roadblocks at the state and federal levels!

For more information on the Galveston Economy: Click Here


Search Our Site

powered by FreeFind

Search the Internet


Website Statistics