A lead tourism official says the city of Durango is breaking its own rules to balance its budget, but the city says everything is being done above-board and the way it has been done for years.
Staff has proposed transferring money from the Durango Tourism Fund to pay for expenses in the general fund and transportation budgets. In total, the city wants to move $475,000 in revenue from the tourism fund to be used for administrative fees, special events and transit operations subsidies, according to the 2019 proposed budget.
But, in transferring the money, the city is breaking its own rules, said Frank Lockwood, executive director of the Durango Area Tourism Office.
City code prohibits spending money from the Durango Tourism Fund without a City Council-approved resolution and “detailing the purpose and extent of such expenditures,” the code states. The transfer, proposed by city staff rather than by the City Council, is in conflict with rules requiring the council to detail the purpose and extent of expenditures, Lockwood said.
But Assistant City Manager Amber Blake said the city is following its rules in that the budget, which includes expenditures from the tourism fund, is adopted by resolution, therefore meeting the standard required by code.
Lockwood said the City Council isn’t giving attention to detail to the expenditures as required by the city code. When councilors approve the budget, they’re giving a nod to hundreds of line items, Lockwood said, and are not providing detailed information about how tourism funds will be spent.
In a presentation before city councilors Tuesday, Lockwood said that for every dollar spent on marketing, the city sees $8.75 in revenue, whether through lodgers tax or sales tax. The city is losing out on potential income by not investing the full lodgers tax into DATO, Lockwood told city councilors.
Councilors sided with the opinion of staff in that a resolution to adopt the budget is sufficient to meet the standards required by the tourism tax code. And there’s no money in the budget to fund the extra $175,000 that DATO requested be added to its $725,584 budget.
Councilors did acknowledge the importance of investing in tourism marketing: They suggested a lodgers tax increase to pay for what DATO perceives it loses to the general fund.
“I think we need to plan for it. I think we need to make it a priority,” Councilor Melissa Youssef said of a lodgers tax increase. “This would be such a huge benefit to the community. We have to attack this as soon as possible. I know the city would benefit a lot from this.”
Transferring money from the tourism fund in the budget is nothing new – the city has been doing so since at least 2014, city budgets show. And the amount that has been transferred has been steadily increasing since then, and at a faster rate than revenues or the budget for DATO.
The money transferred from the tourism fund increased by 100 percent from 2014 to 2018. Revenues increased by 44.82 percent, and the tourism office’s budget increased by 11.46 percent in the past four years, city budgets show.
“Doing something wrong several times does not make it right,” Lockwood said.
Money in the tourism fund is collected from lodgers tax, which applies to people who stay in hotels in Durango. The city code defines what that money can be spent on: “advertising the community; improving its transportation services; financing new facilities; attracting conferences, conventions and meetings of a commercial, cultural, educational and social nature to the city; and to allocate a portion of the revenue derived therefrom for administrative and clerical expenses.”
While it would seem the city is within its bounds in transferring money for administrative fees, festivals and transit operations, Lockwood said city staff is circumventing a process. The specific decisions to transfer money are being made by city staff, not by the City Council as stipulated by city code, Lockwood said.
“They’re not detailing it,” Lockwood said of city councilors, “which is what the ordinance says they need to do.”