City staff presented proposed budgets to council members in a special session Wednesday that forecast a loss of $51 million in revenue from hotel occupancy tax (HOT) and city facilities in 2021.
The City of San Antonio’s HOT allocation, generated from hotel and motel stays, annually funds a major portion of the budget of the Henry B. González Convention Center, the Alamodome and other local sports facilities, as well as the city’s history and preservation efforts, arts and culture, and much of the tourism bureau, Visit San Antonio.
Those departments and initiatives have felt the pain this year, in unexpected and sudden loss of revenue and subsequent layoffs due to the coronavirus pandemic, and next year looks nearly as bleak.
Both HOT and the city’s facilities revenues are down by nearly half of 2020 budget projections due to travel restrictions that left hotel rooms empty starting in March and crippled the city’s tourism industry through spring and summer.
The waterfall of canceled conventions and events also upended City budgets.
A total of 229 events booked in city facilities this year have been canceled or postponed, resulting in a $17.5 million loss in revenue, said Patricia Muzquiz Cantor, director of convention sports and entertainment facilities, a department funded through a combination of facilities rental revenue, the HOT fund, and the city’s general fund.
“In February, we were on pace to make our revenue budget, and possibly even exceeding those projections,” Cantor said. “However, in March, when the pandemic really brought our operations to a halt, it severely limited our ability to contribute and generate economic impact to our stakeholders and our community as a whole.”
She said the department is projecting a 35 percent decrease in events next year.
Estimated at $69 million, the 2020 annual income from HOT revenue and use of City facilities is down 46 percent compared to the budget adopted for 2020 during the previous year.
In 2021, revenue from HOT and facilities is expected to increase slightly to $78 million but still remains $48 million shy of the 2019 income from those sources.
“With that lower revenue projected for ‘21 and a slow recovery projected for the [HOT] fund overall, [fiscal year] ‘21 continues to be a significant challenge,” said Ben Gorzell, chief financial officer for the City of San Antonio.
Reduced operating expenses in the city’s facilities and a trimmed-down contract with Visit San Antonio makes up for some of that shortfall, Gorzell said. Shifting some of the 266 employees who worked in those facilities to other City departments will also help to address the budget crisis.
The budget for history and preservation has been moved from the HOT fund to the City’s general fund, and that amount has been transferred back to the HOT fund for use in funding the arts and maintaining the convention facilities.
That will ensure those buildings are ready when events can be held again, Gorzell said.
For 2021, the proposed convention and sports facilities budget would total $34.8 million, which includes a $5.9 million contribution from the general fund. The Visit San Antonio budget would be $15.1 million while $8.9 million would go to arts and $6.5 million would go to history and preservation.
Cantor said that in addition to $1.1 million in operational savings due to canceled events, the facilities department is planning for reduced expenses in 2021 due to $11.3 million in employee cuts and adjustments made by transitioning some workers to other City departments.
But this year’s capital improvement plan includes $25.1 million in projects for the Alamodome that the City committed to as host of the 2025 Men’s NCAA Final Four.
The improvements include renovations of the Alamodome’s upper concourse areas, the replacement of elevators and escalators, and the addition of 14 new suites on the south end of the club-level seating and four new large suites on the mezzanine level.
“These improvements are commitments made to the NCAA when the city bid for the 2025 event,” Cantor said. “Work needs to commence on these improvements this fiscal year to be complete before the event.”
Last year’s capital improvement budget of $14.3 million funded four projects, including replacing retractable seating and a portion of the roof damaged by weather in 2018, which Cantor said will be completed in time for the Women’s NCAA Final Four next year.
Other proposals presented to the Council Wednesday included budgets for the arts and culture and aviation departments.
Following the current period of special sessions and public input to the proposed budget, the Council will vote on the fiscal year 2021 budget on Sept. 17.
“We will continue to do quarterly financial updates, and … I think they’re going to mean more, especially in some of our key areas … where we’ve seen some pretty large dips in revenue,” City Manager Erik Walsh told council members.
“There’s still a fair amount of uncertainty … and that’s also why we’re giving you proposed [budget] reductions in 2021 and planned reductions in 2022 because, as the year goes on, we can look at [the] ’22 planned reductions and kind of know where we can dial back or if we need to dial forward.”