Lawrence commission advances 8% transient guest tax on first reading amid hotel industry calls for accountability

The Lawrence City Commission on Aug. 19 adopted on first reading charter ordinance No. 47 to raise the city’s transient guest tax (TGT) from 6% to 8%, a move city staff said will help cover a multi‑year structural shortfall in the TGT fund and pay for preparations tied to the 2026 FIFA World Cup in the Kansas City region. The motion, amended to include a scheduled review in January 2029, passed on a 4‑1 vote.

City staff presented the increase as a narrowly targeted revenue tool paid by visitors and hotel guests rather than by residents. “We are proposing to raise the TGT from 6% to 8%,” Luis Ruiz, the city’s director of Parks, Recreation and Cultural Services, told the commission. Ruiz recommended the change after staff projected that the TGT fund would face recurring deficits under current spending and revenue assumptions.

Why it matters: The commission’s action would raise visitor‑paid revenue that staff says could yield up to about $1 million annually over time, replenishing reserves and funding short‑term World Cup preparations (marketing, fan zones, volunteer recruitment) plus longer‑term tourism investments such as increased convention bid funds and wayfinding. Opponents and several hotel operators urged the commission to tie any rate increase to a transparent budget and clear accountability measures, and they raised concerns about whether short‑term rentals are remitting all TGT owed.

Most important facts

• What passed on first reading: A motion to adopt charter ordinance No. 47 to repeal the earlier charter ordinance cited in the packet and set a new city TGT rate of 8%, with a provision for the commission to evaluate the rate again in January 2029. The ordinance requires two readings and a public notice and is subject to a 60‑day petition/referral period.

• Vote and next steps: The commission approved the first reading 4‑1; the ordinance must receive a second reading and final action at a subsequent meeting and is subject to a 60‑day petition period during which 1% of the city population could force a referendum. If adopted and not overturned, the city would notify the Kansas Department of Revenue and collections would be remitted by the state (city receipts are distributed about one quarter in arrears).

• Budget math provided by staff: Staff’s conservative projection for 2025 TGT revenue is roughly $2.28 million (down from an earlier $2.5 million estimate). At current expenditures the fund ran a projected deficit of about $517,000 for 2025 under a 6% rate; staff said increasing to 8% would remove the structural deficit and could build reserves rather than require ongoing drawdown. Staff described a 60‑day reserve policy and estimated the fund would fall into a critical negative position by 2027 if no change is made.

• Intended uses: Staff emphasized two buckets—short‑term uses tied to World Cup preparations (targeted marketing, fan experiences, volunteer training, visitor infrastructure) and longer‑term tourism and destination investments (Explore Lawrence support, bid funds, place‑making and wayfinding, grants).

What commissioners and public speakers said

Staff presentation: Ruiz said the region expects increased visitation tied to World Cup 2026 because of Lawrence’s proximity to Kansas City and that the city has been planning with unified command, KU and Douglas County for months but lacked a dedicated funding source. “This gives us the additional fuel to execute what we’ve been planning,” he said. Ruiz explained the state remits hotel taxes quarterly and the state retains 2% for administration, so the city would not see collections until about April 2026 if the ordinance takes effect Jan. 1.

Support from event organizers: Richard Renner, producer of the Lawrence Busker Festival, urged the commission to increase the TGT and said past TGT grants enabled festivals that attract visitors. “TGT funds are not just numbers in a budget. They’re investments in the events that define Lawrence,” Renner said.

Hotel industry concerns: Several hoteliers, represented in public comment, supported tourism investment but pushed for transparency and assurances that new revenue would be spent only on tourism‑generating activities. Rhonda Green, director of sales at the Oread Hotel, told the commission that without a “transparent and clear accountable framework, raising this tax places an undue burden on visitors without ensuring tangible tourism‑related benefits.” Derek, the Hampton Inn manager, and other hoteliers repeated concerns about accountability and urged that Explore Lawrence and hotels be involved in priority‑setting.

Explore Lawrence: Kim Anspach, executive director of Explore Lawrence, said the organization is ready to partner on data, tracking and priorities and urged a clear review of allocations: “The community deserves clear and concise reporting of how these additional funds are allocated,” she said.

Short‑term rentals and compliance questions: Commissioners and staff discussed whether short‑term rentals (Airbnb, VRBO and similar) are fully remitting TGT. Staff said Airbnb remits under an agreement with the state, while other platforms or individual hosts might not always be captured; the city will confirm collection details with the Kansas Department of Revenue. Commissioners explored whether the city could set a different TGT rate for short‑term rentals but were warned that such a distinction could raise legal and administrative questions and likely require Department of Revenue review.

Accountability and program review: Multiple commissioners said they want stronger metrics and a program review to ensure TGT dollars produce overnight stays. The motion that passed included an amendment to schedule a formal evaluation in January 2029 (the motion language directs the commission to revisit the rate and allocations in three years).

Votes at a glance (items earlier in the Aug. 19 meeting)

• Adopt ordinance No. 10155 (Star Bond project plan) — Motion: adopt on second and final reading; mover: Commissioner Finkelstein; second: Commissioner Sellers. Outcome: approved, 4‑1 (Commissioner Sellers voted no). (Transcript evidence: staff introduction at ~00:15:45; roll call through ~00:16:15.)

• Adopt ordinance No. 10156 (TIF project plan) — Motion: adopt on second and final reading; mover: Commissioner Finkelstein; second: Commissioner Sellers. Outcome: approved, 5‑0. (Transcript evidence: roll call at ~00:16:40.)

• Adopt ordinance No. 10157 (establish CID and levy CID sales tax) — Motion: adopt on second and final reading; mover: Commissioner Finkelstein; second: Commissioner Sellers. Outcome: approved, 3‑2 (Commissioners Larson and Sellers dissenting). (Transcript evidence: roll call at ~00:17:32.)

• Consent agenda (minus item C‑4‑C) — Motion: approve consent agenda with item C‑4‑C removed; Outcome: approved, 5‑0.

How the ordinance would take effect if adopted

If the commission completes the second reading and the ordinance is not successfully petitioned to referendum during the 60‑day protest period (a petition requires signatures from 1% of the city population under the city’s current charter process), the new TGT rate would be effective Jan. 1, 2026. The city would receive remitted funds from the Kansas Department of Revenue roughly one quarter in arrears.

Unresolved or contingent items

• The ordinance still requires a second reading and the statutory notice/petition period; the final effective date depends on that process and any petition activity.

• Short‑term rental compliance and platform remittance: staff said they will verify with the Kansas Department of Revenue which short‑term rental platforms remit on behalf of hosts and what gaps exist. The commission did not adopt separate rates for different types of lodging; staff and the city attorney said distinguishing rates could raise administrative and legal questions.

• Detailed World Cup spending plan: staff and Explore Lawrence agreed to develop a more detailed plan and accountability framework between the meeting date and the start of 2026, recognizing that city receipts will lag collections.

Ending

Commissioners who supported the measure framed it as a strategic investment in tourism recovery, resilience and a one‑time regional opportunity to host visiting fans and events. Those urging caution sought firmer accountability language and more granular budget detail before a rate increase. The ordinance will return for a second reading and, if adopted, staff said the city would notify the Department of Revenue and compile reporting requirements and an outcomes dashboard for review in 2026 and at the commission’s scheduled evaluation in January 2029.