A statutorily allowed 3 percent lodging tax is imposed by the City Council. Once collected, 95 percent is submitted to the Shakopee Chamber and Visitors Bureau (CVB) and 5 percent is retained to defer administrative expenses. Historically the lodging taxes have been recognized within the General Fund as a tax revenue and the payments to the CVB have recognized as an expenditure within the Finance Department.   

The creation of a Lodging Tax Special Revenue Fund will allow for greater transparency within this new fund and the General Fund.  The lodging tax revenue will still be recognized as tax revenue, but it will no longer be combined with the tax revenue within the General Fund, which is almost entirely property tax revenue.  

This fund should not carry a fund balance as all funds received will be offset by expenditures to both the CVB and the city's General Fund for the administration portion of the lodging tax proceeds.

The 2018 budget did not account for this, so it is also appropriate that the lodging tax revenues and the related expenditures of $370,000 be transferred from the General Fund to the new Special Revenue Fund.