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Durango City Council approves policy for divvying up new lodgers tax revenue

Councilors to revisit funding scheme for tourism marketing annually
Durango City Council adopted a new policy for how it allocates revenues collected by the increased lodgers tax that voters approved in April (Shane Benjamin/Durango Herald file)

Durango City Council has reached a decision about how to divvy up new revenue from a lodgers tax that voters approved in April – at least for one year.

The lodgers tax was increased from 2% to 5.25%. Of the new revenue, 55% was to be spent on sustainable tourism efforts, 20% on transportation, 14% on arts and culture, 11% to be determined by City Council and the final 2% for administrative fees.

While council has had an outline since April, it has been working with city staff members in various subgroups to determine how revenue in each piece of the pie should be spent.

Of the 55% of revenue that is allocated toward sustainable tourism marketing, 75% will go toward regenerative marketing, welcome center operations and other projects to improve the community. The remaining 25% will go toward marketing local events in the off-season, youth events and possible extra money for arts and culture.

City Councilor Barbara Noseworthy requested the funding formula for the 55% be re-evaluated on an annual basis, something she thought had already been agreed upon but was not expressly written in Tuesday’s policy proposal.

She received unanimous support from fellow councilors, and the policy was adopted.

“I see no problem with having flexibility,” said Durango Mayor Kim Baxter. “If the council every year wants to revisit it, it seems there’s no harm in it.”

In voting to approve the policy, Councilor Olivier Bosmans suggested city staff members review notes from previous work sessions to clarify what councilors had agreed on with respect to revisiting the funding formula on an ongoing basis.

“I would prefer to review the meeting that was held and stick with that decision,” he said. “My opinion is that we discussed this and apparently we don’t know exactly what was agreed, so I would like to see the recordings.”

As for the remaining revenues:

  • The 20% allocated for transportation will go toward developing and executing multimodal projects. Some types of projects outlined in the policy include improving Americans with Disability Act accessibility around town, improving bicycle connectivity and improved transit routes for Fort Lewis College students who live off campus.
  • The 14% for arts and culture will be used to pay for arts and cultural events, programs and facilities that are brought to City Council through the Creative Economy Commission for approval.
  • The 11% allocated to City Council may be used anyway the council sees fit as long as it is for the purposes related to the impacts of tourism.

On the ballot, the lodgers tax increase was estimated to bring in $900,000. A busier-than-usual tourism season saw Durango surpass that $900,000 revenue estimate by the end of September.

Final tax revenues for 2021 are still being tabulated. Regardless of the final revenue numbers, the city is able to spend only the $900,000 it estimated on its ballot measure. In accordance with the Taxpayer’s Bill of Rights, any revenue collected in the first year that’s over the amount estimated on the ballot measure for a new tax or tax increase must either be returned to the taxpayer or residents must vote to allow the city to retain the money.

City Council will have to make a decision in the coming months to either find a way to repay excess lodgers tax, or craft a ballot question that lets voters decide if the city can use the money.


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