Groups miscalculated revenue from hotel tax

Two Spokane groups that saw less revenue than expected from a new hotel tax say the problem turns out to be something other than first thought.

Instead of resulting from hotels not charging the slightly higher room fee, the shortfall comes from miscalculating how much those groups – Spokane Regional Convention and Visitors Bureau and Spokane Regional Sports Commission – were actually due, according to one official who reviewed the tax totals.

Both groups promote area tourism and events. And both draw a significant portion of their operating budgets from the TPA, or tourism promotion area, tax. Last fall the room fee charged at most Spokane County hotels went from $1.50 per night to $2 per night. Hotels with fewer than 40 rooms are exempt.

Instead of a boost, both groups saw less revenue from the tax than projected. The groups had to modify programs or lay off staff during the first half of this year.

The shortfall occurred despite more rooms booked during the U.S. Figure Skating Championships and men’s NCAA Basketball games held in Spokane earlier this year. Area TPA managers figured those events into projections.

An initial survey by the Washington Revenue Department suggested some of the hotels required to charge the tax had not collected the fee. On later review, the revenue department found no instances of undercollection in Spokane, said Mike Gowrylow, a department spokesman.

Louise Barnett, administrative manager of the CVB, said her initial 2010 estimates were higher than they should have been. In an e-mail, she cited three reasons for the miscalculation:

• She based the figures on TPA collections in all four hotel categories for Spokane County. But the fee increase of 50 cents per night did not apply to hotels collecting less than $500,000 per year.

• Barnett didn’t factor in the number of rooms booked by government workers staying in Spokane for 30 or more days. They don’t pay TPA tax .

• She also projected the TPA tax by drawing on an industry report that tracks all Spokane County hotel occupancy. “While Cheney and Airway Heights are in the county, those cities are not subject to the TPA collections,” Barnett said.