Hospitality tax still indicates healthy economy

Final tally of last fiscal year's hospitality tax revenue shows a respectable increase, suggesting that Yuma's economy is holding up well during the nationwide economic downturn.

"I think it shows we're doing better than much of the state or even the nation," said Bob Stull, deputy city administrator.

Or, at least people are still eating in restaurants, staying in hotels and enjoying libations.

Stull reported the city had a 4.57 percent increase in revenue from the 2 percent hospitality tax for the 2007-08 fiscal year with a total revenue of $4.4 million. That compares with revenue of $4.2 million in fiscal year 2006-07.

The city's other taxes didn't do as well.

The hospitality tax "was stronger as a whole than the rest of the taxes, such as the (1 percent) general sales tax," Stull said. Revenue from that tax was down .93 percent for the fiscal year with a total of $20.48 million, compared with $20.67 million the previous year.

This was only the fourth time since its inception that the general sales tax has been down, he said. It was down $1,000 for a tiny percent in 1957-58, down 2.9 percent ($11,000) in 1966-67 and down .77 percent ($34,000) in 1984-85.

The 2 percent hospitality tax was originally approved in 1970 to build the Yuma Civic Center, Desert Hills Municipal Golf Course and a baseball complex. In 1993, voters extended the tax to June 30, 2009, when it will sunset unless a new extension is approved.

Stull said the average increase in revenue from the hospitality tax has been between 3 and 6 percent a year. That is until 2003-04, when it rose by 10.99 percent. Large increases continued over the next three years.

"Now we're back down to what's been normal for the life of the tax," said Stull.

Actually, the 2 percent tax revenue for 2007-08 would have been even stronger except for two factors, he said. The state took back $240,000, and someone owes about $100,000, which he expects was paid but coded wrong and will be straightened out in the near future.

Currently, according to the city of Yuma charter, funds from the special tax levied on hotels, restaurants and bars "may be used to pay the costs of acquisition, construction, operation, maintenance, promotion, administration, repair and reconstruction" for three purposes.

Those purposes are the Deyo Complex, the historic Yuma Crossing area, and conventions and tourism.

"Any balance of such 2 percent taxes may be applied in a manner determined by the City Council for the above purposes or to capital improvement projects approved by the city electors at an election," the charter further states.

Such projects might be a new fire station or park somewhere besides the Deyo Complex, Stull said.

The hospitality tax's revenue can vary widely from month to month, Stull said. For example, it's highest during the winter months. That's especially true in March, which reflects collections made in February, the height of the winter visitor season and produce season activity.

The lowest months tend to be in July and August, which reflect collections for June and July, Stull said.

"People say we're becoming less seasonal, but we still are. We have more in the summer now, but we're also up in the winter."

Each month can vary for other reasons as well, he said.

"Sometimes we don't get someone's report one month, then the next month get their report for two months. Month to month, no matter how you look at it, you won't get a good perspective on what's happening."

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Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853.