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Oklahoma City Hotel Tax Revenue Lower Than Expected; Budget Cuts Threaten Rural Firefighting Program

Oct 28, 2016

On Tuesday, the City of Oklahoma City announced hotel/motel tax collections fell for the first quarter of Fiscal Year 2017, and were down even below the most conservative estimates.

The so-called “tourist tax” was down 5.9 percent compared to FY 16, but 2.7 percent below estimates. The Journal Record’s editor Ted Streuli says the effect was felt city-wide, but the downturn really differs based on geography.

“The northeast quadrant of the city - hotels there have the greatest percentage change, they were at 17.5 percent - while the central part of the city, downtown primarily, those revenues were down only about 2.4 percent,” Streuli said.

Municipal treasurer Bob Ponkilla blamed the downturn on a combination of factors Oklahoma City hasn’t quite been able to pintpoint, The Journal Record’s Brian Brus reports:

“We’re seeing something similar in relation to movements in sales tax as well. Our thought is that this is a general decrease in consumer demand for some reason,” Ponkilla said.

The decline in central city tax collections was the first for that sector since mid-2011.

In March, hospitality industry experts told The Journal Record that Oklahoma’s energy-driven economic downturn will have little effect on the development of a new downtown convention center and its adjacent hotel. If anything, recession-like conditions may actually make the project more attractive because construction costs would be lower.

As the newspaper previously reported, the energy downturn shouldn’t affect the development of what’s arguably Oklahoma City’s most high-profile hotel – the facility that will be attached to the MAPS 3 convention center. Streuli described it as a protected project, since it’s funded by the MAPS 3 sales tax.

“The hotel/motel occupancy tax… goes to promotion and marketing and things like fairground improvements. It's money that's spent to attract tourists to come to Oklahoma City. So horse shows at the fairgrounds fill a lot of hotel rooms year-round.” Streuli said. “There was an increase in the hotel/motel tax a few years ago that passed by a landslide, and was actively promoted by the hotels who collect and pay the tax, because they saw the benefit in making sure that those tourist attractions stay up-to-date.”

An emergency vehicle leaves Noble Fire Station No. 1 in Noble to respond to a call on Friday.
Credit Mark Hancock / The Journal Record

Firefighters Face Rural Revenue Shortage

Declining sales tax revenues in rural communities are already constraining municipal budgets, and that’s exacerbated by additional state budget cuts that could threaten core city services.

One program in particular that’s affected is the Rural Fire Defense 80/20 grants that help pay for equipment and fire station construction in communities with 10,000 or fewer residents.

“This year, like the year before, they only had a total of $200,000 to spread around the state,” Streuli said. “And of the 108 volunteer fire departments who applied for grants, only 10 percent of the eligible departments were able to get any of that money.”

That money comes out of the Oklahoma Forestry Services budget, which is led by state forester George Geissler.

From The Journal Record’s Brian Brus:

When Gov. Mary Fallin called for cuts due to severe revenue shortfalls, he had to make some tough choices, Geissler said. For the 2015-2016 fiscal year, the Oklahoma Forestry Service distributed more than $3.67 million in operational grant funds to 857 certified rural fire departments across the state, or about $4,300 per department. To keep equipment funds up, some of the operational expenses had to go down.

“I didn’t feel that the 80/20s could be cut, even though Forestry (Services) as a whole were cut almost 11 percent,” he said. “I’m worried about it remaining a viable fund for much longer. It’s not a lot of money to go statewide.”

While Geisler deals with his budget, sales tax revenues are declining at the municipal level.

"The Noble fire chief, Bob Hall, protects about 6,700 people over 14 square miles. That includes some small businesses, residences, farms, some undeveloped rural areas,” Streuli said. “He and some others that run small all-volunteer departments have mutual aid agreements with neighboring departments, but they're more and more struggling just to keep their fire trucks running with these budget cuts.”

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