Hotel/Motel committee ‘unaware’ city cut its funds

WASHINGTON — A municipal committee that guides Washington’s use of hotel and motel tax revenue had its funding cut this fiscal year, when the city budgeted for a $50,000 transfer from its account into the general fund.

Committee members said they weren’t advised of the change until their regular meeting June 24.

But Washington Mayor Millie Youngquist — who is also chair of the hotel/motel tax committee — said she and other council members weren’t informed of the changes either, which were finalized in a municipal budget that passed in April.

Youngquist said the adjustment was likely written into the budget by former City Administrator Deanna McCusker, who resigned earlier this year for personal reasons.

“I think I can speak for everybody that we don’t necessarily look at every line item,” she said. “Usually if there are changes, we’re notified of those, and we were not.”

The planned transfer was legal, according to City Attorney Kevin Olson, who cited state and municipal codes which only require that at least 50% of a city’s hotel/motel tax revenue be spent on tourism promotion efforts, initiatives that, in Washington, are overseen by a board of two city officials, two chamber representatives and three members of the public.

But it may have violated a resolution passed by the council in 2017 when the city’s hotel/motel tax was enacted, which said all funds from the tax would be put into one account and spent “only with the recommendation of the fund administration committee.”

“It’s the intent that, that’s what it was going to do, but you can’t really bind another council down the road,” Olson said. “That was from 2017 … at the time, that’s what the council (wanted,) and I’m assuming that until this year, that’s what they did with this fund.”

But committee members said they already had plans for the expected cash.

Hotel/Motel comitte representatives said they expected the actual transfer at the end of this fiscal year to total somewhere closer to $40,000, based on projected revenue, and statewide rules that limit uses for 50% of the tax’s revenue, which last year was around $80,000.

The transfer, while legal, could cause a shortfall that may force the committee to delay future projects, if not cut already-planned initiatives according to members. Committee Member and Washington Chamber of Commerce Director Michelle Redlinger said the budgeted transfer would leave the committee $17,000 shy of the money needed to complete projects it has already committed to.

The list includes plans to partially pay for a tourism-promoting position at the chamber. Also potentially at risk are holiday light repairs downtown, a grant to Main Street Washington for re-branding efforts, and a videographer to film and produce promotional content for the city’s downtown area.

Committee members said they’d already signed off on some of those projects, but might have to go back on agreements where the cash hadn’t changed hands yet if they didn’t have the money.

“I am here to plead for the hotel/motel committee, that those funds are given back to us,” said Committee Member Charla Howard at a council meeting Aug. 6. “We’re set apart from the city’s general fund for a reason. Those funds are designed for a completely different reason … I still feel like we’re not getting answers.”

With McCusker no longer in office, officials said they couldn’t be sure why the money was moved into the general fund, or why council and committee members didn’t get a heads-up beforehand.

Joe Gaa, the new city administrator, said his predecessor may have sought to pad a budget trimmed by state-mandated tax cuts. He said he planned to prevent future communication mishaps with the committee.

“I can promise you that moving forward, we won’t have any surprises with cuts we haven’t talked about,” he said. “We will share the bad news.”

Council members said they couldn’t promise they’d have enough money to return dollars to the hotel/motel committee. But officials said they hoped to do so if they had leftover cash at the end of this fiscal year.

City Finance Director Kelsey Brown said that was fairly likely, but not certain.

“So far, every single year, we have outperformed our projections in the general fund, so it’s unlikely that we wouldn’t,” she said. “But it’s something that, on paper, did balance the budget.”

Editor’s note: an earlier version of the this article reported an inaccurate amount transferred from Washington’s hotel/motel fund to the general fund. It has since been corrected.

Comments: Kalen.McCain@southeastiowaunion.com