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Arts, Sports Battle for Cut of Texas Hotel-motel Tax

McKINNEY, Texas (April 26, 2005) -- The timeless battle between the jocks and the arts may soon turn into a fight for tax dollars in the Texas Senate.

A legislative change introduced at the request of McKinney officials would increase the number of cities allowed to spend hotel-motel tax dollars on sporting events.

Critics say it would dilute one of largest supplies of government money available to local arts groups in nine Texas counties, including Collin and Denton.

"We're not anti-sports, but you can see there is no protection in the legislation to prevent a community from diverting money from arts to sports if they wanted to," said Kass Prince, a board member with Texans for the Arts and facility manager of the Irving Arts Center.

"We're in a tough economy, and all charitable groups have to scratch for their funding."

Texans for the Arts, billed as the state's official arts advocacy group, is rallying members against the bill.
Under existing tax code, cities in counties with fewer than 290,000 residents can dispense the hotel-motel money directly for promotional and other expenses associated with sporting events that draw tourists.
Changes, passed by the Texas House and headed for the Senate, would push the population threshold up to 1 million residents.

First authored by state Rep. Ken Paxton, R-McKinney, and now included in a broader bill by state Rep. Mike Krusee, R-Round Rock, the new threshold would not affect the state's largest counties, such as Dallas and Harris.

"The goal is to bring more people staying in hotels and motels and create a bigger pie for arts groups. We're going to create a larger pie to be shared," Mr. Paxton said Thursday.

"I just look at what's going on with Frisco and McKinney, and I just think [the economic impact] is dramatic. Look at what Frisco has done with the RoughRiders and hockey. All of it can be economically helpful for the community."

A survey of 44 local arts groups across Texas conducted last year found $18 million in hotel-motel revenue received collectively, more than half of the groups' total cash income and easily the largest supply of public funds. All other government revenue combined, including National Endowment for the Arts' grants, accounted for $4.5 million for the groups.

McKinney, however, has already been spending part of its hotel-motel tax money on the promotion of sporting events in recent years, records indicate.

In the last two years, $49,500 has gone to sports groups, partly for the promotion of events such as boxing and baseball tournaments. Only $27,750 has gone to non-sports organizations for the arts, historic preservation and other arts causes.

"That has been a strong rumor ... that the money was not being appropriately spent," said Paulette Owens-Holmes, a former McKinney executive director and candidate for City Council. "My sense was that the tourism dollars were not being correctly spent."

McKinney tourism officials acknowledge a gray area in how to interpret the existing law but say they believe they're allowed to fund advertising and promotion of sporting events through the tax funds. They point to a broad clause in the tax code that allows for promotion and advertising for events that bring tourists to town.

McKinney City Attorney Mark Houser said he has not conducted a detailed review of how the funds have been spent by local sports organizations.

"When you talk about a general category like advertising and promotional expenses for a city, some may interpret that to spend some advertising and promotional money related to sporting events," said Scott Joslove, president and CEO of the Texas Hotel & Lodging Association.

McKinney boxing coach Barney Flores said last week that the funds he receives -- $5,000 this year -- go a long way for his Silver Gloves boxing tournament.

"I use it to help me put my tournament on, on expenses and kids I've got to carry," he said. "That's what it's given to me for."


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