City looks at lodging tax increase to pay for airport improvements

Friday, January 13, 2012 | 4:54 p.m. CST

COLUMBIA — Voters would be able to decide whether to increase the city’s taxes on hotel and motel rooms if the City Council follows through on a report to be discussed at Tuesday night’s meeting.

The report calls for state legislation that would allow voters to authorize an increase in the city lodging tax to a maximum of 7 percent; the tax is now 4 percent. The proposed legislation would outline methods for any city in Missouri that has a charter government and a population between 100,000 and 300,000 to increase its sales tax only with the consent of its voters.

Public Communications Director Toni Messina, who wrote the report, said there was no precise timetable for enacting the proposed legislation or for bringing the tax question to Columbia voters. But her report says, with council guidance, staff would pursue enabling legislation during the General Assembly's 2012 session. The first step, she wrote, is to find a sponsor for the bill.

While the nationwide lodging tax average is more than 13 percent, the report notes most Missouri cities charge between 3 percent and 7.75 percent. Current rates now are 7.5 percent in downtown Kansas City; 7.25 percent in St. Louis; 7 percent in Jefferson City and 3 percent in Osage Beach.

Messina said the city staff arrived at the 7 percent figure by considering both the range of tax rates in Missouri and the types of projects — including a bigger airport terminal — that would attract more tourists to town.

Estimates in the report indicate the 4 percent tax produced just less than $2 million in 2011. An increase of 3 percent points would bring that total to nearly $3.5 million.

The report suggests using revenue from the tax increase to finance a bond issue that would pay for the airport terminal project, which Mayor Bob McDavid pushed during a council discussion on Jan. 3.  A proposed addition to the south side of the existing terminal, recommended by the Columbia Regional Airport Advisory Board, would cost an estimated $17 million.

Messina said there is precedent from Jefferson City for enabling state legislation to increase the lodging tax. Approval from the state, she said, would increase confidence among Columbia voters and potential financiers of the airport improvements and other tourism-related projects.

"If you have legal authority at the state level, and if voters approve a tax, and if the city subsequently sells bonds to finance the work, it looks like it could be less risky to the people who buy the bonds," Messina said.

City ordinance requires all lodging taxes collected to be used to fund the Columbia Convention and Visitors Bureau. Amy Schneider, executive director of the bureau, said the report represents the beginning stages of discussions to increase the lodging tax.

Messina said the legislative language proposed in her report would allow the council flexibility to establish both a lodging tax rate and uses for that revenue for approval by voters. Any legislation eventually enacted could impose more specific restrictions, if amended by the General Assembly.

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