GAO. Government Accountability Office. New Mexico Office of the State Auditor
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1 GAO Government Accountability Office New Mexico Office of the State Auditor Transparency Report Lodgers Tax Expenditures Lodgers Tax Provides Revenue to Develop the Tourism Industry Local governments in New Mexico have the option of imposing a lodgers tax on rentals of motel and hotel rooms, trailer camps and several other rental settings. Municipalities and counties have two years to expend collected revenues and typically expend carryover funds in each annual budget. Revenue. Every vendor providing lodging within the county or municipality that imposes a lodgers tax is responsible for collecting that tax. If the county or municipality collects more than $250,000 in lodgers tax revenue, the governing body must conduct random audits of vendors to confirm compliance. Expenditures. Currently, the law provides that, for Class A counties or municipalities with a lodgers tax greater than two percent, 50 percent must be used to advertise, publicize and promote touristrelated attractions, facilities and events. The remaining 50 percent of revenues may be used for collecting and administering the tax; for tourist-related facilities, attractions or transportation systems; or for financing capital items associated with tourist-related facilities, attractions or transportation systems. If the tax is two percent or less, one-fourth of the revenue must be used to advertise, publicize and promote tourist-related attractions, facilities and events. In determining whether an expenditure is an appropriate use of lodgers tax revenues, local governments reported that they consider: Will the event or use of funds bring people from out of town? Will the out-of-town visitors stay at motels, hotels, motor or trailers courts or other lodging facilities? Will out-of-town visitors be eating at local restaurants? Will out-of-town visitors frequent other stores, sites or attractions in the local area? The law does not further specify the types of acceptable expenditures. The law also does not mandate particular disclosures of expenditures at the county or municipality level. Given the broad discretion that counties and municipalities have in spending lodgers tax revenue, the expenditure disclosures of the municipalities that the OSA received for Fiscal Year 2014 in connection with this Transparency Report appear to be consistent with the lodgers tax Act. Lodgers Tax In a nutshell Enacted in 1969, the Lodgers Tax Act (Sections et seq., NMSA 1978) enables an optional tax, imposed at the city or county level, on persons using commercial lodging accommodations. The tax provides revenues to administer the taxing program and to promote tourist-related events and other activities including advertising for promotion of events and supporting tourist-related facilities. The Act requires a five-member Lodgers Tax Advisory Board appointed by the mayor or county commission chairman. Learn More For data on New Mexico lodgers tax receipts visit: The Bureau of Business and Economic Research: New Mexico Department of Finance & Administration: bution.aspx Financial reporting plays a major role in fulfilling government s duty to be publicly accountable in a democratic society. Governmental Accounting Standards Board, Concept Statement No. 1.
2 Lodgers Tax Expenditures page 2 Case Studies The Office of the State Auditor conducted the following case studies, examining municipalities that impose a five percent lodgers tax. Some of these municipalities also impose hospitality fees, convention center fees, and other items that may apply to the same transactions as the lodgers tax. Albuquerque: The City of Albuquerque reports that it uses lodgers tax revenues for advertising, publicizing and promoting certain recreational and tourist facilities as well as acquisition and construction of such facilities as provided by law. The City of Albuquerque s expenditures of lodgers tax revenue were payments for the following: 1. Debt service ($5,115,000) 2. Albuquerque Convention & Visitors Bureau operations ($4,264,000) 3. Hispano Chamber of Commerce ($581,000) 4. Indian Pueblo Cultural Center ($30,000) 5. American Indian Chamber of Commerce ($49,863) 6. SMG Convention Center management company ($190,000) Carlsbad: The City of Carlsbad reports that it uses lodgers tax revenue to defray costs of advertising, publicizing, and promoting tourist-related attractions, facilities and events of the municipality or county and tourist facilities within the area. The City of Carlsbad also uses lodgers tax funds for the Chamber of Commerce s management of its conference center as well as operations for its performing arts center and other promotional events. The City of Carlsbad s largest expenditures of lodgers tax revenue were payments for the following: 1. Chamber of Commerce general advertising ($303,083) 2. City facility management ($282,333) 3. Erosion control at Pecos River Village ($253,434) 4. Paving at Pecos River Village ($80,875) 5. Museum exhibit expenses ($46,314) 6. Nuclear Summit advertising ($40,234) Gallup: The City of Gallup reports using lodgers tax revenues for the purposes of advertising, publicizing and promoting facilities and tourist attractions, and for acquiring, constructing and maintaining certain facilities related to tourism. The City of Gallup s largest expenditures of lodgers tax revenue were for the following: 1. Debt service ($420,999) 2. Red Rock Park Event Center operating costs ($259,419) 3. Chamber of Commerce advertising ($145,000) 4. National Junior High School Rodeo Finals Rodeo ($119,534) 5. El Morro addition ($55,333) 6. Chamber of Commerce Convention Center contract ($50,000) Summary of Case Study Data Municipality FY14 Audited Revenue* FY14 Reported Expenditure Albuquerque $10,789,915 $10,229,863 Carlsbad $ 1,867,404 $1,154,266 Gallup $ 1,253,927 $1,518,467 Hobbs $ 1,524,140 $1,573,328 Las Cruces $ 1,910,846 $2,244,392 Santa Fe $ 8,376,475 $8,000,000 Taos $ 1,034,548 $ 1,119,928 * Revenue does not include rollover from previous years.
3 Lodgers Tax Expenditures page 3 Hobbs: The City of Hobbs reports using lodgers tax revenues for advertising; promoting certain recreational and tourist-related attractions, facilities and events; and acquiring, establishing and operating tourist-related attractions, facilities or transportation systems. The City of Hobbs largest expenditures of lodgers tax revenue were for the following: 1. Payments to the Lea County Economic Development Corporation in connection with airline subsidies for the Lea County Regional Airport ($500,000) 2. City of Hobbs security in connection with the Hobbs United States Specialty Sports Association League ($228,604) 3. Lea County Fair and Rodeo Board ($150,000) 4. Lea County Event Center ($127,500) 5. Lea County Economic Development Corporation for airline advertising ($106,674) 6. Southwest Symphony ($91,990) Las Cruces: The City of Las Cruces breaks its lodgers tax budget into administration, sales and marketing expenditures, expenditures for the convention center, and sponsorships. The largest line items in the City of Las Cruces lodgers tax budget were for the following: 1. Advertising ($580,835) 2. General administration ($355,327) 3. Sales and marketing purchased services ($340,684) 4. Convention Center purchased services ($128,496) 5. Sales and marketing classified employees ($114,244) 6. Sales and marketing general travel ($92,493) Santa Fe: The City of Santa Fe reports that it uses lodgers tax revenues for the purpose of advertising, publicizing and promoting facilities and tourist attractions; acquiring, constructing and maintaining tourist attractions and recreational facilities; and for all other legally permissible purposes. The City of Santa Fe also imposes a tax on lodging specifically for the Convention Center at an additional rate of two percent, with the revenue used to service debt associated with the Convention Center. In contrast, lodgers tax revenue finances the operations of the Convention Center. The City of Santa Fe s largest expenditures of lodgers tax revenue were for the following: 1. Debt service for the Convention Center ($2,285,714) 2. Marketing for the Convention Center ($1,714,286) 3. Payments to the Convention and Visitors Bureau for the Convention Center s operations ($1,142,857) 4. Arts Commission ($1,142,857) 5. Special uses allocations distributed to the Convention and Visitors Bureau for marketing ($1,114,286) 6. Transit, solid waste and police and fire overtime in support of tourism activity ($600,000) Taos: The Town of Taos reports its lodgers tax is used for marketing and promotion of Taos, visitor center operations, chile line transportation operations, and convention center operations. The Town of Taos largest expenditures of lodgers tax revenue were for the following: 1. Payments to Griffin & Associates for advertising and marketing ($369,818) 2. Visitors Center personnel costs ($217,918) 3. Town s portion of a public transportation grant match ($208,470) 4. Visitors Center operating costs ($132,316) 5. Interfund transfer for the Civic Center ($52,041) 6. Payments to DMC Broadcasting for advertising and marketing ($18,620)
4 Albuquerque Lodgers' and Hospitality Tax Expenditures Fiscal Year 2014 Total Tax Collected - Albuquerque Lodgers Tax $ 10,309, Debt Service - "Brick & Mortar" $ 5,115, Top Line Contracts American Indian Chamber of Commerce 49, Indian pueblo Cultural Center 30, SMG - Convention Center Management Co. 190, Remian Balance $ 4,924, % Albuquerque Convention & Visitors Bureau 4,264, % Hispanic Chamber of Commerce 581, $ 10,229,863.00
5 Carlsbad Lodgers' Tax Expenditures Fiscal Year 2014 AGENCY AMOUNT PURPOSE Carlsbad Mainstreet $ Advertising for Farmers Market Bataan POW Coalition $ 2, Promotion of documentary Carlsbad Community Concert Association $ 6, Advertising Carlsbad Chamber of Commerce $ 303, Advertising Carlsbad Chamber of Commerce $ 282, Management of city facility Carlsbad Mainstreet $ 6, Advertising Carlsbad Chamber of Commerce $ 15, Advertising for retirement Great American Bike Race $ 8, Advertising CDOD Nuclear Summit $ 40, Advertising AFP Fight $ 3, Advertising City Project $ 14, Fireworks City Project $ 46, Museum Exhibit Expense City Project $ 26, Firefighter Challenge City Project $ 17, Museum Advertising City Project $ 13, Culture & Recreation Advertising City Project $ 80, Pecos River Village City Project $ 9, Halagueno Arts Park Improvements City Project $ 2, Airport entrance City Project $ 253, Erosion Pecos River Village City Project $ 13, Park Improvement Fierro & Fierro $ 5, Annual Audit City Project $ 2, Replace banner arms on Mainstreet Total Expenditures $ 1,154,267.62
6 City of Gallup Lodgers Tax Report Fiscal Year 2014 Beginning Cash Balance 1,676, Revenue Tax Investment Income 1,253, Expenditures Transfers-Debt Service 420, Red Rock Park - Event Center Operating 295, Audit 0.00 City Event - 4th of July Celebration City Event - Run for the Wall 11, City Event - NJHSFR 119, Advertising - City 49, Chamber of Commerce - Summer Dance Contract 44, Chamber of Commerce - Advertising Contract 145, Chamber of Commerce - Convention Center Contract 50, Chamber of Commerce - Visitors Guide Contract 35, Events Funded - Promotional expenditures only 2nd Annual 4-H 3D Shoot 2, st Gallup Inter-Tribal Ceremonial 25, Adventure Gallup 5, Ceremonial Dance Performances 25, Ceremonial Queen Contest 5, Chupacabra Desert Race - Summer 5, Clear Channel Radio 4th of July Celebration 10, El Morro Addition 55, Fireball Run 5, Four Corners Youth Football Championships 17, Gallup Bike Park 35, Gallup National Off-Road - Spring 4, Gallup Promotion MOU 18, Gallup Rotary Basketball 2, Knifewing Productions/ Native Stars 4, Land of Enchantment Opera Institute of 13, Lions Club Rodeo 15, NMJHS/NMHS Rodeo Spring 3, Old Timers Labor Day Tourney 3, Red Rock Arenacross 3, Red Rock Balloon Rally 25, Red Rock MX Series / Total Year (5 race 5, Squash Blossom Classic 10, Wild Thing Championship Bull Riding 20, Ending Cash Balance 1,442,397.28
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14 ORG OBJECT Las Cruces Lodgers' Tax Expenditures Fiscal Year 2014 Administration ORIGINAL APPROP REVISED BUDGET ACTUALS / ADMINISTRATION / CLASSIFIED / PART TIME SEASONAL / SCHEDULED OVERTIME / PERA / FICA SOCIAL SECURITY / FICA MEDICARE / WORKERS COMPENSATION / INSURANCE ADMININSTRATION FEE / RETIREMENT HEALTH CARE INS / HEALTH INS / LIFE AND DISABILITY INS / DENTAL INS / PROFESSIONAL & TECHNICAL SRVCS / MAINTENANCE AGREEMENTS / MOTOR POOL REPAIR & MAINTENANC 2, , , / MOTOR POOL FUEL & LUBRICANTS 1, , , / GENERAL BLDG REPAIR & MAINT 2, , , / COPYING FEES 3, , , / PRINTING / PURCHASED SERVICES GENERAL / CVB ENTERTAINMENT / BLDG OR LAND RENTALS 57, , , / TRAVEL GENERAL - 18, , / DUES 1, , , / GENERAL UTILITY SERVICES 6, , , / ELECTRICITY 9, , , / TELEPHONE 9, , , / SUPPLIES GENERAL 15, , , / SOFTWARE / MINOR COMPUTER EQUIPMENT / WK COMP - DEPT CHARGE 15, , , Sales and Marketing expenditures ADMINISTRATION 354, , , CLASSIFIED 123, , , REGULAR PART TIME PART TIME SEASONAL 24, , , CONTRACT EMPLOYEES 40, CELL PHONE STIPEND - 4, , SCHEDULED OVERTIME - 7, , PERA 72, , , FICA SOCIAL SECURITY 31, , , FICA MEDICARE 7, , , WORKERS COMPENSATION INSURANCE ADMININSTRATION FEE , , RETIREMENT HEALTH CARE INS 9, , , HEALTH INS 80, , , LIFE AND DISABILITY INS DENTAL INS 5, , ,390.07
15 Las Cruces Lodgers' Tax Expenditures Fiscal Year MAINTENANCE AGREEMENTS 2, MOTOR POOL REPAIR & MAINTENANC MOTOR POOL FUEL & LUBRICANTS GENERAL BLDG REPAIR & MAINT POSTAGE AND FREIGHT 25, , , ADVERTISING 526, , , COPYING FEES LEASE PAYMENTS 10, , , PRINTING 37, , , PURCHASED SERVICES GENERAL 286, , , CVB ENTERTAINMENT 70, , , CVB CONVENTN GRP/EVENT SUPPORT 95, , , BLDG OR LAND RENTALS TRAVEL GENERAL 115, , , DUES 16, , , MAGAZINES/PERIODICALS/BOOKS 2, , , GENERAL UTILITY SERVICES ELECTRICITY TELEPHONE TELEPHONE CELL PHONES 4, , SUPPLIES GENERAL 5, , , MINOR EQUIPMENT - 1, , SOFTWARE 1, , MINOR COMPUTER EQUIPMENT 8, , , WK COMP - DEPT CHARGE CREDIT CARD FEES 2, , GENERAL BLDGS CAPITAL OUTLAY Convention Center LEASE PAYMENTS 3, , , PURCHASED SERVICES GENERAL 104, , , LICENSES GENERAL UTILITY SERVICES 75, , , OTHER CHARGES MAJOR COMPUTER EQUIPMENT - - 5, GENERAL BLDGS CAPITAL OUTLAY - 30, Sponsorships VDR NAME/ITEM DESC AMOUNT NMSU SPECIALTY EVENT SHEBBY LEE TOURS INC - TOUR SERVICES U S SPECIALTY 1, AMERICAN MEDICAL RESPONSE - BIGGEST LOSER EVENT
16 12/17/2015 CITY OF SANTA FE LODGERS' TAX DISTRIBUTION SUMMARY FISCAL YEAR 2014 FY 09/10 Budget: FY 07/08 actuals reduced by 8% = $8,093,533 FY 10/11 Budget: FY 08/09 actual reduced by 10% = $7,085,080 FY 11/12 Budget: FY 09/10 actual increased by 8% = $7,811,084 FY 12/13 = 7,300,000 estimate;revised to 7,700,000 FY 13/14 = flat initial estimate, $7,700,000 FY 13/14= revised estimate based on projected actuals FY 12/13, $8,000,000 FY 14/15 Budget = flat, $8,000,000 Total Lodgers' Convention Convention Convention Arts Special Uses Marketing Total Tax Revenue Center (1%) Center Fee (1%) Center Fee (1%) (1%) (50% of 3%) June 1999 March 2004 Aug / Lodgers' Tax Revenue $ 8,000,000 Transfers In for Programs 1,142,857 1,142,857 1,142,857 1,142,857 1,714,286 1,714,286 8,000,000 Administrative (General Fund) Total 1,142,857 1,142,857 1,142,857 1,142,857 1,714,286 1,714,286 8,000,000 Total for ,428,571 FY 15/ ,142,857 Debt Service for the Convention Center 2,285, ,714,286 Marketing for the Convention Center 1,714, ,714,286 Payments to the Convention and Visitors Bureau for the Convention Center s operations 1,142, Arts Commission 1,142,857 8,000,000 General Fund Special Uses Allocations: 1,114,286 Fund 2113/22105 Marketing (CVB)* Transit, solid waste and police and fire overtime in support of tourism activity 600,000 Undistributed 1,114,286 much of this will go to Marketing ,714,286 - Total 8,000,000 Visitors Bureau & Convention Center (2122,2113,2115): Arts (2112): Administrative costs being captured in services of other department assessment, not through transfer to General Fund Total: 0
17 Town of Taos Lodger's Tax Expenses FYE 2014 Amount Administration $ 68, Visitor's Center Personnel $ 217, Operating 132, Advertising/Marketing El Crepusculo Inc. DBA The Taos News $ 14, Taos County Chamber of Commerce $ 2, Taos Communication Corp $ 11, DMC Broadcasting $ 18, DMC Broadcasting - Mother's Day Event $ 6, Griffin & Associates $ 369, Taos Fiesta Council, Inc. $ 15, Eagle Thunder Enterprise $ 3, $ 350, $ 350, $ 440, $ 440, Public Transportation Interfund Transfer into Public Transportation to cover the Town's portion of Grant Match $ 208, Civic Center Interfund Transfer into Civic Center $ 52, Total Expenditures FYE 2014 $ 1,119,927.69
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