Last week, the council discussed their goals for the hotel/motel tax fund, voting to increase the reserve amount. The fund pays for events within the city that promote local business and tourism, and marketing dollars “spent to put heads in beds in Poulsbo,” said Sandy Kolbeins, owner of The Loft restaurant and president of the Historical Downtown Poulsbo Association.

The funds, collected by two 2 percent tax levies, are distributed through grant requests but reviewed in the budget each year. Deb Booher, finance director, said for the past two years, the second 2 percent — a levy authorized by the state for the purpose of tourism marketing — funded a coalition of businesses “in the hopes of consolidating funds for advertising.” The coalition consists of the Chamber, the Farmer’s Market, HDPA, Marine Science Center, Historical Society and other event organizations. The fund is also used for police overtime during events and administrative costs as well as advertising.

The council policy on reserves has been to put aside 12 percent of revenue and/or able to maintain two months of operating cash, according to Booher. The 2011 reserve balance was $32,452, and the 2012 reserve is expected at $32,477. The council would like to bring the reserve up to $40,000 starting in 2013.

However, after a “financial crisis” earlier this year, business owners and members of HDPA testified to the council that they didn’t agree in increasing the amount going to reserves when they could actually use the money.

The city cannot prepay for services and contracts, Booher said, and instead reimburses businesses through the grant funding. Until June of this year, the Greater Poulsbo Chamber of Commerce was paying for much of the services up front — at the beginning of the year, many contracts such as the brocures need to be paid, explained Kolbeins.

In the future, he added, the HDPA will take over the Chamber’s role in signing and prepaying for contracts. No contract can be reimbursed without the receipt,  to ensure the fund isn’t overspent. But much of the hotel/motel dollars don’t come in until the summer months. Tammy Mattson, treasurer of HDPA and owner of three downtown restaurants, said its a game at the end of the year, to ensure they will have enough money to pay for end of the year events, such as Jule Fest, while still having enough money to start off the year when new contracts need to be paid.