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Deputy town manager, finance director brief advisory committee on accommodations tax, warn of likely revenue decline and explain workforce‑housing cap
Summary
Town staff told the Accommodations Tax Advisory Committee how state and local ATAX revenue is distributed, explained that Act 57 allows up to a 15% workforce‑housing allocation under conditions, and warned applicants to expect lower post‑COVID receipts and revised grant totals for 2025.
Deputy town manager Josh Gruber and finance director Adrianna Burnett briefed the Accommodations Tax Advisory Committee on how state and local accommodations‑tax (ATAX) revenues are distributed, what uses qualify for grants, and how recent revenue trends could affect grant awards.
Gruber told the committee the state ATAX is a 2% tax on overnight lodging and that statutory distributions set aside the first $25,000 for a municipality’s general fund, another 5% for general fund purposes, and 30% to a destination marketing organization (DMO) for tourism and marketing. "That leaves about 65% that this committee helps advise on," he said, noting the committee’s role is advisory: the group makes recommendations that town council may accept, modify or reject.
Gruber described eligible expenditures under the statute (advertising and tourism promotion, arts and cultural event support, and capital projects in certain categories) and stressed that maintenance and routine operational expenses are generally not eligible. He also explained Act 57 of 2023, which permits municipalities to allocate up to a 15% cap of accommodations‑tax revenue toward workforce‑housing initiatives, subject to prerequisites such as a local housing analysis and incorporation into the jurisdiction’s comprehensive plan. "The 15% is just a cap," Gruber said; the town must still decide whether and how much to actually appropriate.
Burnett presented historical and recent revenue figures and cautioned the committee not to assume pandemic‑era receipts will continue. She said pre‑COVID annual receipts were about $6.49 million, COVID years rose to as much as $13.57 million, and 2024 receipts were roughly $12.7–12.8 million. Burnett said staff expected a fourth‑quarter payment near $5.8 million but the state remittance was about $4.7 million, and staff currently estimate 2025 normalization near $12.8 million. "What I'm seeing based on these numbers is a decline," she said, and added that staff currently project roughly an 8% reduction in ATAX revenue compared with recent highs.
Burnett and Gruber both urged applicants and committee members to plan for lower available grant dollars. Burnett said council will set the final distribution and the committee should expect staff to provide the FY funding number before the committee finalizes recommendations: "We're hoping...in October for sure," she said.
Committee members pressed staff on whether capital projects or land purchases should apply through the advisory committee or directly to town council. Gruber said capital construction and land‑acquisition projects that are part of the town’s capital improvement program are typically handled by council; but he repeatedly encouraged applicants to submit applications for staff and the committee to vet rather than presume ineligibility.
Next steps: staff will provide the committee with the official funding figure for the upcoming cycle (anticipated September/October), applicants must submit ATAX applications by 4:00 p.m. on Sept. 6, and hearings/presentations are scheduled for Oct. 17 and Oct. 24, with final recommendations to council planned for Nov. 7.
