City takes new approach to discuss bed tax disbursement with revenue recipients

City Council has engaged in conversations with the recipients of the Bed Tax funding as Globe seeks to increase and coordinate marketing efforts for the city.

“Council had first talked about making changes during our Strategic Action Plan meeting in 2023, which included equal distribution to the recipient organizations, and we really could have done a better job communicating this with the bed tax organizations,” Globe Mayor Al Gameros says. 

The Bed Tax was established in 1990 through AZ Rev Stat § 9-500.06, which allows municipalities to charge a tax on hospitality industry businesses, including restaurants, bars, hotels, motels, liquor, grocery and convenience stores or recreational vehicle parks.

The state statute directs those funds to be used for “the promotion of tourism,” including:

1. Direct expenditures by the city or town to promote tourism, including but not limited to sporting events or cultural exhibits.
2. Contracts between the city or town and nonprofit organizations or associations for the promotion of tourism by the nonprofit organization or association.
3. Expenditures by the city or town to develop, improve or operate tourism related attractions or facilities or to assist in the planning and promotion of such attractions and facilities.

The City of Globe receives the transient lodging tax collected by the Arizona Department of Revenue from local city hotels and distributes these revenues quarterly to the Globe-Miami Chamber of Commerce and Southern Gila Economic Development Corporation, which receive 22.5% of the disbursement; Cobre Valley Center for the Arts and Downtown Association, receiving 20%, and the Gila County Historical Society at 15%.

The funds were intended to enhance marketing efforts by the five organizations to help bring tourism dollars to the community. The original agreement with the organizations was penned in 1993 and updated in 1999, which included key strategic goals for each recipient organization.  

When the most recent changes were presented to the public in January 2024, this included equal distribution to the bed tax organizations, but would now also include the City as a tourism marketing partner, with the proposed budget going to the City of Globe’s First Friday event.  

The City used First Friday as a measure of  how revenues have increased since 2017 when the City embarked on its economic development initiative. The results of Council’s focus has led to new growth and infrastructure improvements throughout the community. The proposed funding is intended to enhance overall marketing efforts that will benefit everyone in the long run.

“This isn’t just for First Friday, it is for our focused City driven marketing plan,” Gameros says. “Our priorities, our strategy and our professional capacity have significantly changed since 1999, particularly with the establishment of the Economic & Community Development Department, and we now have the ability to initiate marketing that we didn’t have before.”

Since Fiscal Year 2016/2017, Bed Tax revenues have increased more than 120% generating between $230,000 and $250,000 annually.

After hearing public input at a recent Council meeting, the City Council established a work group to begin dialogue with the five organizations to discuss planning for the future and collaborating on a more up-to-date contract for the distribution of funds that will move from quarterly to biannual disbursements.

“We’ve invested a lot in our marketing efforts since 2017 when we created the economic development team and the strategies we’ve developed to improve the quality of life for all our residents,” says Councilman Freddy Rios, who along with Gameros and Vice Mayor Mike Stapleton have represented Council in discussions. “The City has had a big learning curve, but we have put ourselves in a position to find additional resources, partnerships and grants to keep our economic engines going and create new ones.”

According to research generated by Dean Runyan Associates, visitors to the area spent $31.8 million in 2022, a 7.3% increase over the $29.6 million spent in 2021. Tax collections from travelers coming to Globe-Miami increased to $3.3 million, 10.8% more than in 2021.

Visitor spending on accommodations increased 4.8% over 2021 spending to $9.8 million, and revenues from hotels, motels and short-term vacation rentals rose 6.7% over the same period to $19 million in 2022.

Overnight visitor volume increased 10.7% and taxable lodging sales increased to $8.4 million annually in 2022, a rise of 4.5%.

“That’s due in part to the branding and marketing we’ve done, but everything costs money,” Rios says. “Our revenues are very, very positively moving in the right direction, but we’re also doing a lot of other things like improving City infrastructure.”

In addition to expenditures for cohesive branding and marketing, the City has responsibilities and costs associated with events the five organizations bring to the community, including public safety, facilities maintenance, insurance and cleanup.

Ultimately, the Council is concentrating on supporting the success of all of the Bed Tax organizations as well as the business community of Globe, because “a rising tide lifts all boats.”

“We are wanting to work together to market the city as a destination for both new residents and new business development; and to produce high quality events that attract visitors and for residents to enjoy. If they succeed, the city succeeds and if the city succeeds, they succeed,” Gameros says. “It’s not the City against any of these organizations. We would like to collaborate to strengthen their base, and ultimately the economic base for the City and our residents.”

Now that the City has the ability to focus on tourism marketing, it will give the nonprofits leeway to spend revenues they would usually have to spend on marketing for other aspects of their organizations, such as hiring staff and maintaining facilities.

“This is a partnership and whatever we do with those tax dollars, we want to be responsible community leaders,” Rios says. “We have the burden of that responsibility, but we also have a fiduciary responsibility, and I prioritize that very highly.”