2nd try for new city tax defeated Merchants fought levy to finance convention bureau

March 29, 1996|By Gary Gately | Gary Gately,SUN STAFF

For the second time in two months, an effort to create a new city tax district to raise money to attract conventions and tourists has failed.

The bill, sponsored by state Sen. Larry Young, a Baltimore Democrat, would have enabled the city to create an independent authority empowered to collect taxes and other fees from businesses to raise money for the Baltimore Area Convention and Visitors Association.

But Mr. Young's measure died yesterday without a vote when the city's Senate delegation decided against acting on it during the delegation's last scheduled meeting of this General Assembly session.

The bill, like an earlier effort by the Greater Baltimore Committee to impose a restaurant tax to raise money for the marketing agency, became a casualty of fierce opposition from trade groups representing restaurants, bars and retail stores.

"We could not move forward in a constructive way so this pretty much sounds the death knell," said Sen. Perry Sfikas, a Baltimore Democrat.

Mr. Sfikas and fellow Baltimore Democrat state Sen. George W. Della Jr. had united in opposition to the measure. Both said their stance reflected the opposition of business owners in their districts, which include Fells Point, Little Italy and Federal Hill.

And like other opponents of a new tax, they asserted that the city should commit more of the estimated $8.7 million a year in hotel room tax revenue to marketing the city.

All revenue from the 7 percent tax now flows into the city's general fund.

Baltimore is one of the few cities in the nation without a dedicated source of funding for its convention bureau. The agency, after repeated cutbacks in city spending, now receives about $2.8 million a year, $2 million of it from the city, and its budget amounts to about a third to half of what competitors spend.

The Greater Baltimore Committee, which backed the new tax district after withdrawing its proposed 1 percent restaurant tax in February, has repeatedly warned that a lack of marketing money jeopardizes the city's $1 billion-a-year tourism and convention industry at a time when the convention center is undergoing a $150 million publicly financed expansion.

The influential business group had sought to win over opponents last week by proposing amendments to the bill that would have shrunk the district while excluding stores and bars that serve little food.

Although there are less than two weeks left in the legislative session, other lawmakers are considering forcing the city to dedicate some or all of the hotel room tax revenue to the convention bureau.

Revenue diversion

As city senators opposing any new tax consider possibly amending other legislation to strip control of the room tax from Mayor Kurt L. Schmoke, House Speaker Casper R. Taylor Jr. said he is trying to win legislative support to accomplish the same goal.

"We don't need another tax; we need the city of Baltimore to spend the room tax revenue where it should be spent -- on promoting the city," the Allegany Democrat said.

Mr. Schmoke, who has repeatedly said the financially strapped city cannot afford to spend more on the convention bureau, could not be reached for comment last night.

The need for more money to market the convention center and pay the city's $50 million share of the expansion cost has been underscored by new statistics showing convention and trade show bookings plummeting by 1999. The small number of bookings for major events, generally reserved three to five years in advance, would not generate nearly enough to cover the city's estimated $4.5 million annual principal and interest cost for the expansion.

That, in turn, would mean an automatic increase in the 7 percent hotel tax, under a compromise engineered by Mr. Schmoke when he held off on a proposed 1994 increase. But increasing the hotel tax could further reduce bookings, leading to growing concern that the center could become a costly failure without an infusion of millions of dollars to cover marketing and expansion costs.

Within a few years, business leaders warn, that could mean declining business downtown, layoffs and the loss of millions of dollars in potential tax revenues.

It could also set the stage for a showdown between the city and the state over control and funding of the convention bureau. Under the expansion agreement between the city and the Maryland Stadium Authority, the city is charged with promoting and marketing the center "at a level appropriate for a facility of its size and market capability."

Pub Date: 3/29/96

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