Hotel tax shift hits Des Moines' arts and tourism
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Illustration: Brendan Lynch/Axios
Des Moines and around a dozen other local governments are taking steps to retract support for the region's tourism bureau and one of its largest arts funders as they wrangle with recent budget restrictions established by the Iowa Legislature.
Why it matters: Catch Des Moines and Bravo Greater DSM are key players in making the region a destination.
- Losing out on events means less economic activity, fewer visitors, and fewer cultural offerings.
Driving the news: A longstanding agreement between metro cities is being revised to decrease the proportion of hotel/motel tax revenue allocated annually to the two nonprofits, costing them approximately $800,000 each, Catch DSM director Greg Edwards tells Axios.
- The DSM City Council will vote Monday night.
State of play: Local governments are being limited by a recent state law on how much they may increase property taxes, generally at rates below typical inflation.
- DSM's estimated $700,000 total annual reduction to the groups will redirect funds to the city's operating budget to help cover city services and address a $17 million budget shortfall resulting from the legislative squeeze.
Zoom in: Bravo's mission is to enhance regional cultural funding, and it has awarded over 1,300 grants to local organizations since 2006.
- Catch DSM promotes the metro and often provides incentives to attract large conventions or events, such as the May 31 return of the Red Bull Soapbox Race.
Follow the money: The groups are almost entirely funded by allocations of the area's 7% tax on hotels and motels.
- Compared to their latest tax filings, the hotel/motel reductions represent approximately a 12% decrease in the roughly $6.5 million in government grants Bravo and Catch DSM each receive.
Stunning stat: They collectively generate hundreds of millions of dollars in tax revenue and economic impact in the metro, according to recent presentations to the DSM City Council.
What they're saying: The cuts come when other nearby cities like Omaha and Madison are increasing tourism budgets to attract more activities, Edwards said.
- They could result in fewer youth programs and higher ticket prices, reduce access to the arts, and have negative effects on the workforce, Bravo president Sally Dix tells Axios.
The other side: The organizations offer a clear value but the cuts are necessary to minimize negative budgetary impacts on residents, DSM city manager Scott Sanders tells Axios.
What's next: Area cities are expected to approve agreements that reduce the allocations before the new fiscal year begins July 1.