The 1 percent annual tourism tax that owners of restaurants, hotels, and motel operators pay is under scrutiny by the City Council.

Council Vice President Dave Beckering, Ward-7, raised the issue at the April 10 work session. He said he wants to examine whether the tax could be put to better use.

Voters approved the tourism license tax in 1984. Restaurants, hotels and motels throughout the city pay 1 percent of gross receipts to the city.

In the first year, the tax generated $323,325. In 2010, the tax generated more than $2 million which is spent by the Greater St. Charles Convention and Visitors Bureau on tourism efforts.

“It’s really a matter of how much is enough?” he said. “You started with $300,000 in 1984, now we’re spending over $2 million. I don’t know what the right answer is, but when it gets to that level of expenditure, I think we need to look at it.”

One possible change Beckering suggested would be to ask voters to approve using half of the revenue from the 1 percent tax for tourism and half for street improvements.

"It's simply an idea, I'm open to any and all discussion," he said.

Is Tourism an Economic Driver in St. Charles?

Beckering said sales tax is one way to measure the success of the efforts of the Greater St. Charles Convention and Visitors Bureau.

Beckering did some initial analysis and found that the sales tax generated by tourism for businesses on Main Street, hotels and motels between July 2010 to June 2011 was about $682,479. That's less than 5 percent of the sales tax collected for the city for the year. (See more of Beckering's analysis here.)

“We spent a quarter of a million dollars last year on Christmas Traditions,” he said.  “And I’m not suggesting Christmas Traditions is not a good thing. There’s no question it’s good for tourism. But if you’re only generating $600,000 in the whole city for the whole year, is a quarter of a million the right number to spend?”

David Leezer, new director of the Convention and Visitors Bureau and Economic Development, said he disagrees with the assessment that only business owners of shops on Main Street benefit from money spent on Christmas Traditions.

“Nobody noticed what happened downtown? Only the businesses? This city benefitted, that’s No. 1.,” he said.

He also pointed out that the Blanchette Bridge will close down in six months, which will impact Ameristar Casino and other businesses on Main Street.

“What’s our largest employer in this town? Ameristar,” he said.

Council Seeks More Information

Council members said it was an issue worth studying further. Earlier in the work session, the council heard a presentation on the five-year financial forecast for the city, which showed in five years the city will be spending more than it takes in.

“There’s a tremendous amount of money here and if truly the figures he gave us are truly correct, we’re spending a lot of money and not getting a lot of bang for our buck,” Councilman Jerry Reese, Ward-6, said.

Councilwoman Laurie Feldman, Ward-3, reminded council members that the community is built on arts, culture, tradition and history in addition to concrete streets.

“We also need to look at what we’re doing for families to encourage them to live here,” she said. “What are we doing to make sure our community is well-rounded?”

Council President Mike Klinghammer, Ward-8, said it’s difficult to put a monetary amount on the value things like swing sets or ball fields provide to the community. 

“But your point, Dave, is well suited, that we sit back and take a dispassionate look. Is this the right amount to be spending on tourism-related issues?” he said.

Council members asked Leezer’s office to provide more information about the performance of the St. Charles Convention Center and how the tourism tax revenue has been spent.