Duluth City Council approves hospitality tax planThe Duluth City Council has approved plans to divvy up more than $7.7 million in hospitality taxes it expects to collect next year.
By: Peter Passi, Duluth News Tribune
The Duluth City Council has approved plans to divvy up more than $7.7 million in hospitality taxes it expects to collect next year.
Councilors voted 6-1 in support of funding recommendations from city administration, with Jim Stauber in sole opposition.
He said his primary objection was over $12,500 designated to pay for membership on a rail alliance working to advance the Northern Lights Express line, which advocates hope will one day run between Duluth and the Twin Cities. Stauber has long been skeptical of the project and has been one of its most vocal opponents.
Although the city has set aside only $12,500 in hospitality taxes for the alliance in 2014 — the smallest allocation to be made next year — Stauber said the cumulative effect of Duluth’s participation in the initiative has been costly.
“This means we will have spent about $275,000 to date to sit on a committee. It’s not like they’re actually building a railroad or anything,” he said. “We’re merely sitting on a committee, and our participation has been abysmal.”
Stauber said that even Gov. Mark Dayton has acknowledged that plans for the railroad are unlikely to be realized any time soon.
“We don’t have that kind of money to waste,” Stauber said.
Stauber’s philosophical objections to the project came as no surprise to David Montgomery, Duluth’s chief administrative officer, who said it remains to be seen if the money will be needed in 2014. Nevertheless, money for the rail alliance was included in the budget as a placeholder, because the majority of council members and Mayor Don Ness have continued to support efforts to bring the Northern Lights Express project to fruition.
The 2014 hospitality tax plan approved Monday will hold funding levels steady for most organizations. But a few entities will receive a boost.
The Duluth Entertainment Convention Center will see its 2014 payment increased by $120,800 because of a state law designating that a certain percentage of hospitality tax revenues must go to pay off debt on the Amsoil Arena. The DECC again will be the largest single recipient of hospitality taxes, garnering $2.86 million in 2014 — 4.4 percent more than it did last year.
Spirit Mountain also will receive a bump of $145,700 to help pay off debt related to the expansion of its Adventure Park.
Meanwhile, the amount of hospitality taxes transferred to the city’s general fund will jump up by $90,000 to cover the cost of hiring police park rangers as well as paying for Police and Fire Department overtime related to tourism events.
Hospitality taxes are generated by special additional sales taxes charged on lodging, and on food and beverages served in the city.
Hospitality tax collections are projected to increase by 8.15 percent next year, compared with 2013.
Not all the city’s anticipated hospitality tax receipts have been dedicated. The city expects to hold $34,900 as undesignated funds in 2014.