A dispute between the City of Kelso and Cowlitz County over $270,000 in tourism tax dollars has local lawmakers caught in the middle.
As part of its 2019 legislative agenda, Kelso is asking 19th District state representatives to amend a state law regarding the way tourism tax dollars are distributed in Cowlitz County to allow cities to keep revenue generated from hotels and motels within their boundaries. Under Kelso’s proposal, the county’s five cities would double their tourism dollars, but the county’s portion would drop by 66 percent.
While the amount of money at stake isn’t large, city officials say they could use the additional funds to promote local events and accelerate community projects, such as the $2.5 million effort to refurbish Kelso’s Tam O’Shanter Park.
County officials, however, say the legislation would undermine their regional approach to tourism. County Commissioner Dennis Weber this week said he is “unalterably opposed” to the proposal.
As things stand now, the cities and county get 2 percent of the state sales tax collected in their jurisdictions to promote tourism. In addition, Cowlitz County collects another 2 percent lodging tax from hotels and motels throughout the county for tourism projects.
Kelso wants to keep that additional 2 percent in lodging tax revenue generated within its city limits — about $185,000 — instead of letting it pass to the county. The change does not affect taxpayers, but would redistribute the revenue.
Under a 1997 state law, lodging tax money goes back to the cities where it is collected except in Cowlitz and Snohomish counties, Kelso City Manager Steve Taylor said last week. (The two counties are exempt because of a complex series of amendments to state lodging tax laws since the 1990s.)
Taylor said the city’s proposed change would make cities more self-sufficient.
“We would love to be in a situation to generate more tax revenue within our own community and build things that way rather than having to ask the state for more money,” he said.
Legislators last week seemed to agree the request was “reasonable.” And the Kalama, Woodland and Longview councils will consider signing a joint letter supporting the legislative change.
Castle Rock, however, has opted not to support the proposal. Mayor Paul Helenberg said Castle Rock sees a greater benefit from the county distributing the tourism dollars.
The county budgeted for about $410,000 in tourism dollars this year, County Chief of Staff Axel Swanson said Tuesday. (The county budgets conservatively, and recent estimates show that the county will receive closer to $500,000 in 2019, he said.)
If the legislative change is successful, the county’s tourism revenue would drop to about $140,000 per year.
The county has budgeted $228,000 for its tourism program, $60,000 for the “Big Idea,” $50,000 for community visitor centers and $50,000 for smaller tourism grants. The rest of the funds are saved as reserves.
The Big Idea was created in 2011 to pool lodging tax revenue and distribute it to one jurisdiction each year on a rotating basis. This shared pot of money helps support smaller communities that don’t make enough money on their own for larger tourism efforts, Weber said.
The $228,000 for the tourism program, which is operated out of the Cowlitz County Event Center, is used to print advertisements, distribute brochures and promote Mount St. Helens, Swanson said.
“Our regional and collaborative approach is a good use of the funding. And much of the money goes back to those jurisdictions. There’s a strong case to be made that tourism and promotion of our area is better done at the regional level,” Swanson said.
County Commissioner Joe Gardner added that many of the people staying in Kelso hotels may spend their days visiting other tourism destinations in the county.
Castle Rock would gain about $10,000 a year if the legislation is changed, Helenberg said. In comparison, Castle Rock received $34,000 this year from the county for tourism projects.
In addition, Castle Rock used the Big Idea funds to build its visitor center, he said.
“I understand where they are coming from, but at same token, Kelso is the biggest receiver (of lodging tax revenue) and each one of our cities sends people to Kelso for hotels and motels,” Helenberg said.
Kalama City Administrator Adam Smee said he has been advocating for the legislative change. Before McMenamins, Kalama received about $5,000 in lodging tax, Smee said Monday. The city estimates it garnered $24,000 to $28,000 in tourism dollars last year after the chain opened its lodge and restaurant at the Port of Kalama in April. With the proposed legislative change, that would likely double to about $48,000.
While the Kalama City Council hasn’t taken formal action yet, council members seem to be on board with the proposal, Smee said.
“We don’t have any hard feelings about it, but if we have the ability to capture revenue locally, it’s something we’d like to do (to support) events and opportunities here,” Smee said.
Longview receives about $40,000 in tourism dollars annually. Last year, the city received about $85,000 in requests for the funds, City Manager Kurt Sacha said Wednesday.
There could be room for a “happy medium,” Sacha said, if the cities agree to help support the county’s tourism program. The Longview City Council is set to discuss the proposal at its meeting at 7 p.m. Thursday in City Hall.
19th District Democrats Sen. Dean Takko of Longview and Rep. Brian Blake of Aberdeen last week both called the request reasonable and fair.
“I think the county should be willing to treat Kelso like any other city. Lodging tax, no matter who collects it, is going to promote tourism and put heads in bed,” Takko said.
“It seems like a fair request and we’re going to see if we can’t resolve it in a way that’s fair to all parties,” Blake added.
Aberdeen Republican Rep. Jim Walsh also supported the legislation, saying local entities should be allowed to control their own tax revenue.
Before approaching legislators, Taylor, the Kelso city manager, said he had “numerous” meetings with county staff and commissioners since the summer, but they could not reach an agreement on the matter.
“We have been working diligently to find a solution that does not require a legislative change, and we were not able to agree on the principle that any of this money should be reallocated,” Taylor said.
Commissioner Gardner said Kelso’s legislative request didn’t surprise him because Taylor was upfront from the beginning that it was a possibility.
“Unfortunately, we’re not going to agree all the time,” Gardner said. “We understand where they’re coming from. Certainly we will have to continue to work with the cities on all sorts of things. This is just one of those things we don’t see eye to eye on.”