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Thursday, August 21, 2014

Bed Tax Talk: Considering How Taxpayers Got Stuck Funding Our City's 'Brand'

Posted By on Thu, Aug 21, 2014 at 11:46 AM

click to enlarge downtown_cleveland.jpg
Positively Cleveland, the private nonprofit apparently responsible for everything good in your lives ("You're Welcome," as the tagline goes), oversaw a tidy tourism spike from 15.6 million visitors in 2012 to 16.2 million visitors in 2013. Earlier this summer, Cuyahoga County Council approved a 40-year extension on a 1.5 percent tax on hotel stays — an "achievement" that the Northeast Ohio Media Group credits directly to the tourism organization receiving the money.

The "bed tax" was instituted in 1992 to fund construction of the Rock and Roll Hall of Fame.

Each year through 2034 now, around $1.2 million will come from the bed tax extension to fund those exciting triennial induction ceremonies here in Cleveland. The other anticipated $3.5 million annual tax revenue will be used by Positively Cleveland for "the support of tourism," according to county legislation. (Positively Cleveland CEO David Gilbert received $536,000 in 2012, for cash-flow context.)

Note that the county's bed tax had been at 4.5 percent all this time. The rationale behind the tax, however, shifted rather dynamically as deliberations approached this year. 

The board of trustees has been assigned the task of divvying up the fresh millions. It's unclear what sort of input will be accepted from those funding this surge.

It's become something of a routine in Northeast Ohio politics to sign checks and cast taxpayers' money toward things no one seems to be able to specify — and all too often toward developments that don't fall under the parameters of city government. The bed tax in this case, which will make the city more attractive (signage! branding!) by tapping the wallets of the very people the city is trying to attract — downtown guests.

Last year, the Global Business Travel Association ranked Cleveland as having the sixth-highest tax burden for incoming guests. The city had actually jumped up in the standings from No. 7 in 2012. (See below.) “Municipalities are under pressure to raise revenue wherever they can, but imposing too heavy a tax burden on business travel is a shortsighted strategy,” says Joseph Bates, GBTA Foundation vice president of research.

GBTA
  • GBTA

Positively Cleveland's "Curb Appeal" program deserves its props, though we'll ignore the lackluster naming convention for now. Earlier this summer, PC cleaned up dreary Prospect Avenue with flowers and public art, which is promising and does leave an impact on out-of-town guests. The idea is to do more of the same in the other parts of downtown currently decorated with little more than yesterday's tumbleweed Sports sections or orange barrels signifying something (?) is in progress.

With the RNC due in town a couple years from now, you can bet that more Curb Appeal stuff will be hitting the streets (hold the chandelier, Cleveland, please) and more "support of tourism" will be funded on the backs of your family members holed up at the Westin. 

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