Part 1 is here.

This was going to be about why the City Council should hold DeKalb Area Convention & Visitor’s Bureau (CVB) accountable for its $50,000 annual allocation. It’s still about that, but also counters a story being floated in some circles today about how Re:New DeKalb nobly requested their $45,000 allocation come from TIF this year instead of the General Fund so Council could have the option to restore social services funding.

This is utter hogwash. Re:New’s funding wasn’t supposed to come from the General Fund. It was supposed to come from the Economic Development Fund, funded by the hotel-motel tax. This was set up last year after the Financial Advisory Committee recommended to earmark certain revenues for certain purposes.

What it’s really about is a screw up, and the inability of this city to live within its means.

Last year, Council decided to earmark hotel-motel taxes for tourism and other development in a new fund, the Economic Development Fund. For FY2009, here are the recipients:

Daley Policy Group — $72,000
DeKalb County Economic Development Corporation (DCEDC) — $42,500
Re:New DeKalb — $50,000
Chamber of Commerce (for CVB) — $50,000

Total: $214,500. City administrators projected $200,000 in hotel-motel tax revenues and planned to transfer $14,500 from the General Fund to cover the rest. It did not work out that way. Hotel-motel revenues came in only a bit over $151,000 so they had to dip into the General Fund more deeply — $63,500 — to cover the four allocations for the fiscal year.

Would you hand CVB another $50,000 without asking them to account for the hotel-motel revenue shortfall and what they are going to do about it? Yet, that’s what happened.

For the FY2010 budget, they didn’t dare project more than $150,000 in hotel-motel tax revenues, which of course left about $49,000 to make up if they wanted to allocate funding from the Econ Dev Fund at the same levels to all the above four organizations.

One option would have been to cut the allocations to match the revenues, but that does not happen in DeKalb. Another option would have been to admit the Econ Dev Fund isn’t sufficient to cover what they want to do, but that does not happen here, either. Instead, Re:New steps in to request TIF funding in order to “free up” General Fund money to restore social services funding, pretending their allocation was never part of Econ Dev.

What’s more, the planned transfer from the General Fund to Econ Dev has been upped from last year’s $14,500 to $17,000. The additional $2500? DCEDC got a raise this year.

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Hotel-motel tax raised from 5% to 6% at June 9, 2008 meeting (p. 13)

FY2008: p. 19

FY 2009: pp. 115-116

FY2010: pp. 112-13.