SIDNEY — Sidney City Council is considering changing the rules for lodging tax revenues.

Sidney’s lodging tax was implemented in 2002 to help maintain city services during a time of economic stagnation, as well as to help diversify income, Finance Officer Ginger Adams said in a report to council. By state law, 75 percent of lodging tax collections may go to the general fund to be used for any purpose determined by council. The remaining 25 percent must be used for the support of a Convention and Visitors’ Bureau. It was determined by council at that time to earmark the 75 percent general fund portion for the support of selected outside agencies engaged in various economic development or cultural activities benefiting the city.

Prior to 2002, these activities were funded with general tax dollars — primarily income tax collections. Implementation of the lodging tax provided welcome budgetary relief to the general fund, allowing income tax dollars previously allocated to these outside agencies to be redirected to other essential services such as police and fire protection. Since the last national recession, approximately $50,000 per year has specifically been used to avoid further staffing and budgetary reductions, Adams said.

Since the lodging tax was implemented, the average annual receipts has been roughly $260,000, Adams said.

In 2006, council adopted a Lodging Tax Distribution Policy to formalize the eligibility requirements, evaluation criteria and process for evaluating requests for the use of the 75 percent of lodging tax collections that is deposited into the general fund.

Recently, members of the Lodging Tax Subcommittee have expressed a desire to revise the existing policy, Adams said, as outlined below:

• Contingency funds, originally appropriated but not encumbered or spent by calendar year-end, would be transferred during the next calendar year into a new special revenue fund. Monies available in the new fund would be restricted and used to provide for activities and fund grants to outside organizations that promote economic development, support cultural activities, and/or improve the quality of life for Sidney’s senior residents.

• At the end of the calendar year, a comparison of actual lodging tax receipts and budgeted tax receipts would be done. When actual amounts are greater than budgeted, the difference would be transferred to the above-mentioned new fund during the next calendar year. When actual amounts are less than budgeted, the difference would be transferred from the new fund to the general fund. This comparison and subsequent transfer would not apply to the 25 percent portion that is restricted by state law to be used in support of the Convention and Visitors’ Bureau.

Concerning senior residents, the city owns the Sidney-Shelby Senior Center building and uses some of the lodging tax revenue to maintain the building.

Councilman Joe Ratermann asked if the funding criteria should be broadened to include youth. Councilman Steve Wagner explained there is a “broad umbrella” already in the rules as they list “cultural well-being” of the community and “senior residents” under separate bullet points.

Mayor Mike Barhorst suggested that the word “outside” be removed from “outside organizations” so that city departments would be eligible for use of the funds. Concerning the funding rules, Barhorst said council should “brainstorm it some more,” possibly at its retreat meeting later this year.

Councilwoman Janet Born, who is president of the Senior Center board, pointed out the center has more than 1,000 members. “It’s doing a great service for the town,” she said.