A spending plan
For more than 20 years, Cape Girardeau residents and visitors have been paying special taxes on hotel accommodations and meals eaten at restaurants. Voters approved the taxes in 1983 to pay off bonds that helped fund the construction of the Show Me Center on the Southeast Missouri State University campus. Revenue from the taxes also was earmarked to promote tourism.
A sizable chunk of revenue from the hotel-restaurant taxes was used for two other major projects: the Shawnee Park sports complex and the Osage Community Centre. Operational expenses for the Convention and Visitors Bureau also have been offset by revenue from the taxes.
Over the years, the taxes have produced more money than needed for the various construction bonds and CVB operations. And since April of this year, most of the revenue has been undesignated and is expected to grow to more than $1 million by October. Starting in November, the revenue will be used to pay off the city's portion of the River Campus, which will be a visual and performing arts campus for the university. Based on current estimates, the hotel-restaurant taxes could generate enough revenue to pay off the River Campus bonds by 2012, at which time the taxes would expire.
In the meantime, the city must decide what -- if anything -- to do with the accumulated $1 million in undesignated revenue from the hotel-restaurant taxes.
The issue came up at last week's Cape Girardeau City Council meeting when a $31,117 request for financial assistance to repair the historic Glenn House was approved. That help will come from unspent revenue from the hotel-restaurant taxes. And the council also imposed a moratorium on spending any more of the money until a plan is developed.
It's good that the city will take a careful and informed approach to the use of the unspent funds. There are several major considerations that deserve particular scrutiny:
Does the surplus have to be spent? It could be set aside as a rainy-day fund in the event that future revenue from the hotel-restaurant taxes starts to lag for some unanticipated reason. The surplus would provide a cushion to help the city fulfill its obligation to the River Campus project.
The surplus might be used to accelerate payments on the city's share of the River Campus project. Paying off the bonds early would save some interest expense and would end the taxes on hotel rooms and dining-out bills.
With the city's commitment to use the revenue from the taxes on tourism-related expenditures, this might be the time to identify what major city needs would qualify as having a direct impact on tourism. For example, might the future extension of Fountain Street, providing better access from the new bridge to the downtown area, be funded, at least in part, by the surplus, possibly freeing up other city revenue for other projects?
The CVB board has been asked to come up with a plan for the surplus funds by the end of the year. This should be an interesting exercise -- and one whose aim should be to give Cape Girardeau the best return on the investment that has been made over the years by hotel lodgers and restaurant patrons.