By Susan Estes, Americans for Prosperity. A version of this appeared in the Wichita Eagle.
As the February 28th special election in Wichita nears, members of Tax Fairness for All Wichitans would like citizens to have the full range of facts available as they decide how to cast their ballots.
Most importantly, Wichitans should know that the Ambassador Hotel developer has said that renovation work will proceed and the hotel will open regardless of the outcome of the election. So whatever the impact of the hotel on jobs and downtown — all this will happen even if citizens vote no.
That the hotel will open even if the guest tax rebate fails to pass is recognition of the large taxpayer subsidy that the hotel is receiving. The Ambassador Hotel will benefit from at least eight government programs, all of which cost the taxpayer. Voting No on February 28th simply prevents a ninth layer of taxpayer subsidy from taking effect. The other eight layers of generous taxpayer subsidies are not affected by the election.
Regarding specifically the guest tax rebate that is the subject of the election: Supporters claim that this tax is paid by visitors to Wichita, and therefore is not a new tax that costs Wichitans.
On the surface, this seems logical. But according to the Wichita State University study that hotel developers use, 50 percent of the Ambassador Hotel’s business is diverted away from existing hotels. These hotels — with two exceptions — pay their full share of guest tax to Wichita’s Tourism and Convention Fund. As business shifts from these hotels to the Ambassador Hotel, we can expect revenue to that fund to decline.
The Tourism and Convention Fund is used to fund the city’s tourism promotion, but also for debt service, maintenance, and updates to Century II. The fund is running a loss of $2 million this year, and next year its balance will be near zero. As there are plans for increased spending at Century II, taxpayers across Wichita will likely have to make up for the Ambassador Hotel’s missing tax revenue.
By the way, there are no restrictions on what the hotel owners may do with the diverted guest tax revenue. It is likely to be a source of profit for them at the expense of Wichita taxpayers.
There are also problems with the use of the WSU study regarding the hotel, explained in more detail at dtwichita.com. As an example, supporters cite only the positive impact to one city fund while ignoring the larger negative impact the study found for the entire city. The study also fails to include the cost to taxpayers of all the eight government subsidy programs the hotel is receiving.
Hotel boosters also say it’s important not to oppose the city council’s economic development efforts and send a negative message to future investors. This argument ignores the eight generous subsidy programs the hotel is receiving, at a cost of over $15 million. Remember, the election concerns only a ninth program.
Finally, Voting No helps protect the principle that taxation should be for public purposes, not for private gain.
More information may be found at dtwichita.com.