Sep. 5, 2009--The Orange County Convention Center ends its toughest fiscal year ever this month with a record operating deficit that could hit $18million, the result of a double-digit-percentage plunge in convention-goers at the huge facility.

Budget experts say that the annual loss -- easily the center's highest-ever yearly shortfall and one likely to be repeated next year -- won't affect Orange County's ability to run the center or to make debt payments on the facility's $748million expansion, which opened in 2003.

But after next year, the reserve funds the county will use to offset the deficit will be under real pressure.

"We're really expecting this to be a temporary thing," said convention-center business manager Jan Addison. "But in this case, we are expecting that 'temporary' could mean through next year."

"We'll have to wing it for a couple of years," County Commissioner Bill Segal said. "But it's not sustainable. Let's hope it's just part of the current economic downturn."

Segal and others said raising expo-hall prices or further cutting staffing levels could drive away business, making matters worse. Competition is already fierce for large group events, as struggling businesses trim travel budgets and other cities offer deep discounts to lure big shows there.

However, the tourist-tax revenues that subsidize the convention center -- and pay its mortgage -- are shrinking.

Collections of the 6percent bed tax have dropped 16percent, from $147million in the first 10months of the 2007-08 fiscal year to $123million in the same period this year.

That has meant bad news for those in line for a share of the revenues, including Orlando Mayor Buddy Dyer's massive $1.1billion plan for downtown sports and arts venues and the region's tourism-marketing agency.

The falloff in tax collections has delayed construction of a new $425million performing-arts center, which will now be built in stages. And it has put off for a decade or more a planned $175million renovation to the Florida Citrus Bowl.

The Orlando/Orange County Convention & Visitors Bureau, the nonprofit group that markets the convention center and promotes vacation travel to Orlando, has seen its funding drop by 34percent, in part because of tourist-tax declines. Its tourist-tax funding dropped from $45.5million to $30.1million this fiscal year and is projected to drop to $28.8million in 2010.

Financially struggling arts groups -- which include local theaters and museums -- could lose up to half their $3.4million in tourist-tax funding next year.

The reserve fund set aside to pay off the convention center's debt and deal with its operating deficits will shrink from $131.5million to $112million in next year's budget, records show.

Orange County Comptroller Martha Haynie, who guards the county's convention-center reserves, said that the projected deficits this fiscal year and next are not an immediate cause for alarm but will require "more dramatic measures" if they continue. That could mean even fewer tourist-tax dollars for other agencies.

"When everything is down, everything gets hurt," she said.

In all but two years since the convention center opened in 1983, it has needed to tap tourist-tax revenues to stay in the black. During the 1990s, deficits ranged from a few hundred thousand dollars to $5.8million.

But the deficits have climbed sharply this decade, due in part to the Sept.11, 2001, terrorist attacks, which sent the tourism economy into a spiral, and the 2003 expansion, which doubled the center's exhibit space to 2.1million square feet and increased operating costs. In recent years, red ink ranged from $5million to $10million, averaging $8million.

Then came the 2008-09 recession, prompting a sharp cutback in business travel and criticism of companies and governments that scheduled meetings in tourist and resort areas such as Orlando and Las Vegas.

Conventions spiral down In the fiscal year that ended last Sept.30, the convention center hosted 248 events, with 1.37million visitors. In the past 12months, that dropped to 225 events and 1.2million visitors, a 12percent drop. And in a July budget presentation, officials forecast about 200 events and flat attendance in the coming fiscal year.

The result is an $18million deficit, which county officials agree can't be made up by budget-cutting alone. The center has had a hiring freeze in effect since October and expects to trim salaries and benefits by $3.1million next year. An additional $1.3million will be cut from maintenance and utility budgets.

That leaves officials praying for an economic turnaround.

"We're just hoping for better times and stabilized government budgets," Segal said.

David Damron can be reached at [email protected] or 407-420-5311.

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