By Matt Dotray A-J Media
Lubbock County Commissioners say they’re optimistic after getting their first look at revenue raised from the new hotel/motel and car rental taxes funding the future expo center.
The county began collecting the 2% hotel/motel tax and the 5% rental car tax, which was approved by voters, in July. Since initiating the tax, the county has one year to issue to the bonds to build Lubbock’s future dirt arena — however nobody knows exactly how much the arena will cost because the county doesn’t know for certain how much it will collect. The estimated price of the expo center has ranged from $30-$50 million, and the steering committee says private funds will be available to help with the cost.
Ronnie Keister, the county tax collector, provided early figures Monday during a commissioners meeting. The first month’s tax for many of the businesses was due last week.
Keister said the county has collected $162,799 from hotels, motels and a few short-term rental houses, and $39,415 from rental car companies, for a total of $202,214 so far for the first month.
“It’s promising,” said Commissioner Jason Corley. “Not everyone has reported yet. It’s July and we’re at $200,000. Cautious optimism is what I’ll say.”
Keister said checks are still coming in. So far the county has received the new hotel/ motel occupancy tax from 59 businesses out of a total of 72, according to Keister. He also said they’ve received the rental car tax from four rental car companies. The county hasn’t received taxes from the rental car businesses at Lubbock Preston Smith International Airport, which has been a topic of concern since a new federal aviation law went into effect. Commissioners Corley, Bill McCay and Chad Seay all said the the figures make them optimistic.
“It’s pretty exciting,” McCay said. “I’m very optimistic. It’s new ground for Lubbock County, so it’s good to finally see some numbers.”
Seay said he wants to see numbers for at least eight months before he starts making predictions.
“It’ll have to average out a little bit,” Seay said. “I think it’s a little high right now, but this is a good start. I’m going to be the person that’s going to side on caution.”
Expectations about how much the tax can support has ranged anywhere from a $25 million bond, which is half of what the steering committee campaigned on, to the full $50 million. Commissioners say it’s still too early to speculate — these are just the figures from the first month, the full amount hasn’t been collected, the county doesn’t know if the payback on the bonds will be 20 or 30 years, and the interest rate will be a key factor. For the sake of speculation, though, the amount collected so far in the first month would yield about $2.4 million over the course of a year. Multiplying that figure over the course of 20 years comes out to $48 million. Multiplying it by 30 years is $72 million. Not counting interest, fluctuating months, other costs associated with the bond and reserves the county will want to set aside, these early figures are promising for the expo center. Keister told commissioners he’ll give regular updates as the collection continues.
“I think the numbers speak for themselves,” Keister said. “I don’t know what people thought the money was going to be, we don’t do projections... I’d hope the numbers continue strong.”
Given that it’s the first month, Keister said they’ll begin reaching out to hotels, motels and rental car companies to let them know their payment is due. He said they’ll follow up with letters, and he anticipates everyone will pay.
The county will need to decide how it proceeds with the car rentals at the airport.
An added amendment in the Federal Aviation Administration Reauthorization Act, which passed into law last October, says taxes, fees or charges cannot be placed on any businesses located at a commercial service airport, or operating as a permittee of such an airport, unless the revenue from those charges is wholly used for airport purposes. This has been a source for some to say rental car facilities at the airport don’t have to pay the tax, but the new law goes on to say that this only applies to taxes, fees or charges “not generally imposed on sales or services by that State, political subdivision, or authority.”
The committee believes the county can impose the tax on rental car facilities at the airport so long as the same tax is applied throughout the county — at rental cars operations outside the airport. That’s as long as the tax is generally imposed and not discriminatory. Rental car companies seem to disagree.