The Juneau Convention and Visitors Bureau and Centennial Hall are facing about a $200,000 drop in hotel-tax revenue.
City officials blame the drop on lower room rates, travel declines and increased use of tax exemptions by state employees renting rooms.
"Obviously it dampens our opportunities to initiate new marketing opportunities and limits the ability to expand programs and start new ones," Lorene Palmer, executive director of the visitors bureau, said Wednesday.
The city paid the visitors bureau $537,000 at the start of fiscal year 2004. For FY05, the bureau is projected to get $425,000 - the lowest amount from bed taxes in a decade, Palmer said. The bureau markets Juneau tours and schedules conventions.
The city allocated about $400,000 to Centennial Hall for FY04, but anticipates cutting that back to $320,000 next year, City Budget Director Craig Duncan said. The Juneau Assembly will have to decide how to handle cuts to Centennial Hall after City Manager Rod Swope presents his FY05-06 budget to the Assembly on April 8, Duncan said.
The city's fiscal year runs July 1 to June 30. The city collects a 7 percent hotel tax; 4 percent goes to the visitors bureau and 3 percent to Centennial Hall.
Palmer said she is looking at tapping some of the bureau's reserve account, cutting travel expenses and using line-item savings from programs. Bed-tax revenue accounts for more than half of the bureau's $900,000 annual budget.
Meanwhile, the state is using its tax-exempt status more often in an effort to cut back on expenses, state Finance Director Kim Garnero said.
As of January 1, the state began issuing First National Bank of Alaska MasterCard credit cards for some state employees to use while traveling on business, she said. If a state employee pays for lodging and then gets reimbursed, the state must pay the hotel tax. This change puts the state in compliance with a Juneau ordinance that requires the government to pay for lodging directly to be exempt on local taxes, Garnero said. The state hopes to save about $500,000 a year, she said.
"The governor was certainly looking for ways to make travel more efficient," Garnero said.
The Baranof Hotel has seen a reduction in room rentals and increases in state employees using the tax exemption, said Vicki Van Fleet, regional sales manager for Westmark Hotels in Southeast Alaska.
The legislative session is the busiest time for the Baranof, which rents rooms, suites and efficiency apartments to legislators, staffers and others who come to Juneau on government business, Van Fleet said. Municipal officials who come on state business have been bringing fewer staffers and renting rooms for fewer nights because of their own budget constraints, she said. Those officials also are holding fewer dinners, receptions and catered events.
"It's unfortunate that it's that way," Van Fleet said. Nonetheless, to be fair about it, it's an easy way to rein in spending for the state."
The bed-tax shortfall won't hurt hotels directly now, but it will affect the whole community later if the visitors bureau's marketing practices are curtailed and fewer people visit Juneau, Van Fleet said.
Tara Sidor can be reached at firstname.lastname@example.org