Hospitality tax is being promoted without consensus in Bemidji
Fast food, restaurant and bar patrons are being singled out to finance the so-called city hospitality tax. Hotels will more than likely be excluded as lodging tax is used for promotions and not infrastructure for event centers. Establishments outside the city limits and city liquor stores are excluded. The latest plan as the city announced is to reduce property tax by $400,000 and make patrons of food and bar establishments foot the bill for the Sanford Center.
The bill? I question whether the bill needs funding. The city claims the center is doing a wonderful business this year and revenue is increasing steadily. Losses may be half what they were last year and after the center gets off of its rough and rocky start, stabilizes the staff and operates efficiently, the center will break even and should make money.
They opened in October 2010 and have had four directors since. Unfortunate first few years, but as they learn from their mistakes the center will profit.
The city has more funds than they may be willing to admit to. This week they announced a $700,000 surplus putting it into reserves. The sales tax will be dedicated to the Sanford Center generating about $1.6 million annually. The franchise tax now generates about $1 million annually from city residents. The city liquors stores this week claim a $700,000 cash flow. This would be a good fit for a Sanford shortfall. Property taxes have steadily increased in recent years and last year were up 8 percent. The LGA from the state is looking to be increased handsomely for the city. Other fees have increased and the total sum of revenue plus reserves seems more than adequate to carry forward for now.
However, even with these excellent reports the city is paying a lobbyist $5,000 to promote the hospitality tax. It appears that transferring $400,000 from property tax to food and bar patrons is the only transaction being accomplished. As last Sunday’s paper discussed, is this fair taxation?
This tax is being promoted without a referendum or consensus in Bemidji. Unless there is undisclosed information this appears to be a trip over a bridge to nowhere.
The Sanford Center needs to operate a few more years to determine its success. Generating a new tax for no gain opens the door for reconsideration and a retraction. This is an uncalled for tax and should go into remission.