City funding for tourism increases after strong year

By Katrina Lewis

Last year’s boom in tourism is increasing funding for visitor-related activities in Lexington’s  next fiscal cycle, says City Manager Noah Simon.

Funding for tourism, he said, “is tied to our meals and lodging tax, so the more we collect in meals and lodging taxes, the bigger the piece of the pie that they get.”

Simon released the proposed budget for fiscal year 2018 – which starts on July 1, 2017– last Friday.

In a letter attached to his budget proposal, he identified tourism as a valued source of revenue for Lexington.

“The city’s economy is largely visitor-based, and revenues derived from meals and lodging taxes fluctuate and are impacted by the overall economy,” Simon wrote in the letter.

The Virginia Horse Center will see increased funding in the next fiscal year. Photo by Carolyn Holtzman.

The city’s contribution to the Lexington sector of the Lexington and Rockbridge Area Tourism operation is increasing by more than 11 percent. Funding for the Virginia Horse Center, a popular tourist destination, will rise by more than 14 percent.

Simon said he is also excited about progress, reflected in the budget, in getting  pay raises for city staff.

“Our priorities as a city are still capital and infrastructure, but things like staff benefits and compensation are key priorities to me,” he said, adding that the budget outlines salary increases of 2.75 percent for all city employees.

The Lexington City Council has a work session for the proposed budget scheduled for April 5, with a public hearing for the budget at the city council meeting April 6.

Patty Williams, the marketing director for Lexington and Rockbridge Area Tourism, said she has noticed an increased number of visitors coming to Lexington. She said tourism has been strong because the city’s history continues to attract older generations, while millennials have also started to visit the area for its breweries, live music and outdoor recreation.

An increased budget would help Lexington support and bolster all that the city has to offer, said Williams.

“We’re very fortunate to have the universities, the Virginia Horse Center — we’ve got some great museums, a nice downtown with shops and restaurants,” she said. “All these things are great things for locals to enjoy, but we also want to attract visitors to come enjoy the sites, too.”

Williams also said some of the budget would be used to research how to promote Lexington as a wedding destination. She thinks that if people visit Lexington for weddings, they will extend their stays, spending more money at hotels, restaurants and shops.

Virginia Horse Center CEO John Nicholson said tourism of all varieties helps Lexington generate revenue.

“Whether you’re coming to see Lee Chapel or you’re coming to show your horses at the Horse Center, the effect is the same,” Nicholson said. “You’re coming, you’re staying in our hotels, you’re eating at our restaurants, and contributing to our economy.”

Lexington Finance Director Gary Swink said the amount tourism sites receive is based on formulas. Municipal officials have no control over what  amount of city funding places like the Virginia Horse Center receive.

Lexington’s historic charm attracts tourists from across the country. Photo by Katrina Lewis.

Swink said the Virginia Horse Center receives 3 percent of the meal- and lodging-tax revenues  from each previous month in the  city and county.

The Lexington and Rockbridge Area Tourism operation receives 0.8 percent of the  meal- and lodging-tax revenues from the previous fiscal year. According to Jean Clark, director of Lexington and Rockbridge Area Tourism, the meals tax is set at 6 percent and the lodgings tax is set at 8 percent in both city and county.

The  proposed Lexington city budget also includes the hiring of a benefits consultant who would review employee pay rates to help the city better decide how to compensate its workers, Simon said.

“We want to reposition ourselves to be in a dynamic place to recruit and obtain our workers,” he said, adding that employees will also benefit from the fact that Lexington’s health insurance premium decreased by 4.9 percent. The decrease saves the city about $71,000.

The savings for the city translate to savings for city employees, who Simon said will “see a benefit from that in terms of dollars in their pockets.”

Outside of more money for city employees and the tourism sector, the city manager said the rest of the proposed budget is business as usual.

“Overall our budget is fairly flat,” he said. “There’s not a lot of crazy, sexy needs in our budget.”

He said the proposed annual budget represents modest increases of — on average — 3 percent from the previous year’s budget.

“Most of that is just normal increases for goods and services,” Simon said about the change. “Just like milk and eggs go up, so does everything else.”

He said the proposed budget is scheduled to be adopted on May 4.

To see the full budget proposal, click here