LAWTON — Lawton’s lodging tax is generating less revenue for fiscal year 2022-2023 than city officials had anticipated, which may force them to rethink the way they allocated those dollars.
Finance director Joe Don Dunham discussed the situation with the Lawton City Council on Jan. 24, but the council did not act on his recommendations.
Lawton officials use the city’s history of lodging tax revenues, along with current trends, as the basis for estimating how much revenue the tax will generate each year. Those revenues are higher than they were last year but are not meeting official predictions.
“We haven’t met our budget projections any, hardly, this year,” Dunham said.
Officials predicted that the tax would generate about $2.5 million for city coffers in FY 2022-‘23, but the actual amount will probably be closer to $2.2 million, Dunham said. He noted that some of those dollars are earmarked for Tax Increment Financing District No. 2, which includes retail development along Northwest Second Street.
When the council approved the city’s budget for the current fiscal year last summer, the council directed officials to allocate about $400,000 for TIF District 2. That left the city with about $1.8 million to distribute among the Lawton-Fort Sill Chamber of Commerce, the Hotel/Motel Economic Development Fund, tourism-related organizations and the Lawton Enhancement Trust Authority.
Also last summer, the council approved a resolution authorizing the city to distribute the proceeds from the lodging tax to various organizations based on either a specific dollar figure or a percentage of the total amount available, whichever was less, Dunham said.
“Based on the resolution that was passed, the only recommendation I can really make is that we reduce what we’re giving out,” he said.
The council originally planned to divide $1.13 million in lodging tax dollars between the Lawton-Fort Sill Chamber of Commerce and the Lawton Economic Development Corp. for FY ’23. Under that plan, the Chamber’s allocation was set at $800,000 and the LEDC’s share was set at $313,000.
But if the council adopts Dunham’s recommendations, the Chamber and the LEDC would receive $927,727 altogether. The Chamber’s share would be $666,844, while the LEDC’s share would be $260,883.
Other organizations would also receive a smaller portion of hotel/motel tax dollars than originally anticipated. Here’s a breakdown of what was originally allocated for each organization, along with Dunham’s recommendations:
Hotel/Motel Economic Development Fund: The fund was originally slated to receive $233,000, but that amount would drop to $194,180 if Dunham’s recommendations are adopted.
Tourism-related organizations: Those organizations were set to divide $355,000, but that amount would be reduced to $295,902.
Lawton Economic Trust Authority: This group was set to receive $112,460, but that amount would be reduced to $93,755.
The new allocations would total approximately $1.5 million, down from the original $1.8 million.
“This is about a $300,000 reduction in what our projections were and what we had allocated out,” Dunham said. “It would give us about $100,000 left to carry over for next year to possibly allocate out.”
He said the council could still meet its original obligations by directing city staff to tweak the formula for distributing proceeds from the hotel/motel tax for FY ’23, which is contained in Resolution 22-97. The council would consider the revised resolution in February.
But if the council takes that approach, the city will have less money available for the rest of the current fiscal year, Dunham said.
“There would be a very minor amount that we roll over to next year or could be used for specialty projects this year that could come up in five months,” he said.
Exploring options
Dunham said he is working with an outside company on developing a program that would allow the city to collect hotel/motel taxes from other types of short-term rental property, such as Airbnbs.
“That will also allow for us to target some of those short-term rentals that may be in place now and not paying taxes – to go back and collect some back taxes that may be owed to the city,” he said. “Because based on our ordinance, they should have been collecting it and remitting it to us anyway. So, I think we’re well within our rights to go back and collect those back taxes that are due to the city for those.”
Mayor Stan Booker said he wanted to explore options for solving the problem that would not involve cutting funding to the organizations that receive a share of hotel/motel tax dollars.
“Maybe we’ll have to, but I want to look and think through options with you,” he said