Visit Austin budget paused after criticism of alcohol, Lady Gaga tab

Spending on Lady Gaga tickets, high-dollar bar tabs and jewelry giveaways led Austin City Council members to hold off Thursday on approving a 2018 budget for Visit Austin, the city’s convention and visitors bureau.

The 7-3 vote to postpone the item for two weeks leaves Visit Austin with only an interim budget for a fiscal year that begins Sunday and kick-starts a debate over how the city should market itself and spend its hotel tax dollars. The move came in response to a story this week by KXAN-TV revealing and airing criticism of the marketing bureau’s entertainment expenses.

The KXAN story highlighted Visit Austin expenditures over the last two years that included bar tabs totaling thousands of dollars for alcohol, $15,000 in gift cards and $33,000 in tickets to concerts by Lady Gaga, the Dixie Chicks, Adele, Beyoncé, Elton John and Paul McCartney in eight cities.

Visit Austin’s public funding, which makes up 80 percent of its budget, comes from Austin hotel taxes. Unlike general sales tax or property tax, hotel tax revenue must go to expenditures that directly bring visitors to Austin.

Visit Austin staff said Thursday that such expenditures are normal for a visitors bureau, as their job is to woo potential convention center clients with food, drinks and music so that they book future events in Austin.

“We’re the live music capital of the world,” said Visit Austin Chief Financial Officer Julie Hart. “We’re going to take people to concerts.”

RELATED: Tug of war intensifies over hotel taxes going to convention center

The bureau usually tries to bring Austin musicians on the road with them, Hart said. The tickets to shows for the artists mentioned would be to provide entertainment at times when that wasn’t possible. The gift cards are typically given to potential event organizers when they come to Austin to buy from local jeweler Kendra Scott or to buy food from food trucks, Hart said.

Hoteliers turned out to agree.

“When you’re trying to get meeting planners in Chicago or Las Vegas, at major trade associations, to come to your event, you’re competing with every major city that has a convention center,” said Scott Joslove, president of the Texas Hotel & Lodging Association. “If it’s a Lady Gaga concert that will get them to come to your event … it’s an incredibly high return on investment.”

The response didn’t convince Council Member Leslie Pool, who pushed for the postponement of a vote on Visit Austin’s budget until the Oct. 12 council meeting.

“We’re all clear that this is how the hotel and lodging industry and the visitor bureau and convention center industry do their business,” Pool said. “That doesn’t necessarily make the spending of tax dollars right.”

Paying to bring local artists to visit potential convention clients is great, Pool said. Luring clients by paying for expensive parties with non-Austin entertainment isn’t, she said.

Mayor Steve Adler and Council Member Jimmy Flannigan defended Visit Austin as generally successful in drawing tourists and events.

“From a high level, they seem to be doing their job well,” Adler said. “I don’t know that I can step out and tell them how to do their job.”

RELATED: Adler: Hotel tax plan would help homeless and Austin Convention Center

He joined in voting for the postponement after Pool agreed to grant interim funding to allow the bureau to make its payroll the next two weeks without dipping into its reserves. Council Members Ora Houston, Sabino “Pio” Renteria and Flannigan opposed the postponement, and Council Member Ellen Troxclair was absent.

The issue comes amid a larger debate about whether more of the $90 million annual hotel taxes — more than 70 percent of which go to the convention center and Visit Austin — should go to other visitor programs. That’s a slightly lower percentage than in previous years, after the council opted to shift 15 percent of the revenue toward parks and historic preservation. Also contentious is whether the convention center should be expanded.

“We are talking about a number of things related to hotel occupancy taxes all at the same time,” Flannigan said. “To come in two days before a budget cycle and want to delay the whole thing, knowing, I think, as a practical matter, that we’re not going to come up with some new way to do convention and visitors’ bureaus … this is not a good way to do policy.”

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