Luzerne County hotel tax revenue declining due to coronavirus travel impact

Luzerne County’s hotel tax revenue has plunged due to the coronavirus-related decline in travel and conferences, according to a county Treasurer’s Office report.

Two entities that heavily rely on the hotel tax funds are closely monitoring the situation — the county Convention Center Authority that oversees the Mohegan Sun Arena in Wilkes-Barre Township and the county Convention and Visitors Bureau, officials say.

The hotel tax is 11 percent here.

The state collects 6%, and the county tacked on another 5% in 1996 solely to help fund county tourism and the arena in Wilkes-Barre Township.

After the county Treasurer’s Office takes 2% off the top to administer the county portion, the split is 80% for the arena and 20% for the visitors bureau.

The pandemic started significantly impacting collections in March, when the hotel tax brought in $165,000, or $60,000 less than the same month in 2019, the report shows.

In April, the total collection was a little over $88,000, or $141,260 less than that month’s collections the prior year.

Overall, the tax brought in $3.07 million in 2019. Receipts were $588,500 for the first four months of this year, it said.

May’s tally isn’t available yet because that month’s payments are not due until June 25, the Treasurer’s Office said.

Arena impact

At the arena, the hotel tax was earmarked to cover the original construction debt and ongoing repairs and enhancements, officials have said.

This April, the arena authority received $69,000, compared to $179,800 that month last year, the report shows. Its hotel tax collection was $129,200 in March, a drop of $47,200 from the prior year’s monthly figure.

Arena debt repayments are approximately $160,000 per month, Gary Zingaretti, chairman of the county Convention Center Authority, said Tuesday.

Zingaretti estimates the authority board will be able to cover the debt payments for five or six months using a reserve from years when hotel tax receipts exceeded the amount owed. If hotel tax revenue remains in decline after that time period, it would start to become a “major concern,” he said.

The board has been diligent in keeping hotel tax surpluses segregated to weather such situations, he said.

Until now, an increase in hotels countywide had steadily boosted revenue from the tax since it was added.

In 1997, the first full year of collection, the arena received $1.03 million. Its total receipts last year: $2.4 million, the report shows.

Some past county officials had expressed an interest in obtaining some of the arena’s hotel tax share to cover county recreation projects, but the commitment to provide the full 80 percent to arena capital debt was locked in legislation.

Tourism impact

As head of the county Convention and Visitors Bureau, Theodore Wampole has been preparing for the possibility his office’s primary revenue stream, the hotel tax, would be sharply reduced.

This year’s budget counts on $602,800 from the tax, which is what the bureau received last year, the report shows.

Receipts from the tax were $17,300 in April, compared to nearly $45,000 that month the prior year. Collections also were down by almost $12,000 in March, the report shows.

In response, Wampole has cut back on spending by eliminating all travel, scaling back tourist promotion advertising, reassessing event sponsorships and imposing other reductions. While many events have been canceled, the bureau may be forced to lower its contributions toward ones scheduled in the fall if they proceed, he said.

If the hotel tax doesn’t significantly bounce back this year, Wampole said the bureau may be forced to dip into a reserve accrued from past years when expenses came in below tax receipts. Keeping a reserve has been a priority because the bureau is self-sufficient and does not request funding from the county’s general fund operating budget, officials have said.

For administering the collection, the county Treasurer’s Office received $61,500 last year. So far this year, the office has been paid about $12,000 for January through April.