EVERETT — A dispute over lodging tax money has divided the Arlington City Council and could cause funding for a popular air show to be slashed by nearly half.
A lodging tax is paid by consumers when staying overnight in hotels, motels, RV parks and Airbnbs. The money goes into a fund for a year. A governing body then distributes that money to activities aimed at boosting tourism.
In Arlington, the city council allocates lodging tax grants based on recommendations by the city’s lodging tax advisory committee.
From 2022 to 2024, SkyFest — formerly known as the Arlington Fly-In — received at least 23% of the city’s lodging tax pie.
SkyFest is the most attended and highest-grossing event in Arlington, with an average annual revenue of $200,000, the event’s executive director, Barbara Tolbert, said in an email. This year’s SkyFest, on Aug. 15-17, drew around 15,000 people.
It also generates the most total room nights for hotels in the city, according to City Council member Debora Nelson. Total room nights is a key indicator when deciding what event gets the most lodging tax money each year.
Now, some council members want to cut next year’s SkyFest lodging tax funding from 22% of the lodging tax fund to 11%, despite repeated recommendations from an advisory committee responsible for recommending fund allocations.
“When recommendations are altered — especially when high-scoring events receive reduced funding — it can feel as though the purpose and integrity of the process are being diminished,” said Jeri Rugtvedt, Arlington Lodging Tax Advisory Committee member, during a city council meeting Aug. 4.
SkyFest’s award would be reduced from $39,960 to $20,000. Many of the city council members, including Michele Blythe, want to spread the extra around to other events.
“I just think $40,000 was quite a bit for one organization when we have so many others that are in need,” Blythe said when the council first reviewed the lodging tax committee’s recommendations on July 7. “I just don’t think it benefits the city itself in revenue to the amount that we’re giving them.”
The dispute continued through multiple city meetings. The city council is on break through September and will make its final decision Oct. 8, according to Arlington City Administrator Paul Ellis.
Arlington’s lodging tax
Each year, the Arlington Lodging Tax Advisory Committee reviews applications for grants funded by the city’s 2% lodging tax.
The amount is consistent with other cities across Snohomish County, Ellis wrote in an email. “There maybe some around the state that are slightly higher or lower but the majority are 2%,” he wrote.
Events that receive lodging tax grants must attract tourists to the city and create overnight stays. The lodging tax committee grades applicants based on various categories — using a system created by a previous council — including partnerships with Arlington hotels, the event’s duration, its growth over time and whether it generates its own revenue.
The lodging tax money is also distributed in large part based on the total room nights the event generates, said Nelson, the lodging tax committee council representative. Total room nights refers to the cumulative number of nights hotel rooms are occupied by guests.
When calculating total room nights, the committee considered all four hotels and motels in Arlington, according to a statement the committee provided to The Herald on Aug. 7: Best Western Plus, Medallion Inn and Suites, Smokey Point Motor Inn and Arlington Motor Inn.
The lodging tax committee then recommends funding based on the event’s grade and how much money it requested. Events cannot receive more than 75% of their total projected costs.
“Trying to keep things equitable”
SkyFest is responsible for generating 300 room nights, Nelson said during a work session on July 28. The next highest is Arlington’s Fourth of July event, which totals 150 room nights.
In 2020, the COVID-19 pandemic shut down all events in Arlington. The city rolled over lodging tax funds for the following years. With extra money and fewer applications, Arlington could provide events after the pandemic with almost all they asked for, Nelson said.
From 2021 to 2024, SkyFest received 100% of its requested funding, including $45,000 in 2023 and $30,000 in 2022 and 2024.
This year’s SkyFest only received $15,000.
There was less money to go around, Nelson told The Daily Herald, because the money banked after 2020 had run dry and the council wanted to prioritize new events to reach a broader range of people. “We wanted to draw more and different people into the city,” she said.
Also last year, SkyFest received a rental waiver — which they had since 2016, a 2024 council agenda said— totaling almost $8,000, according to a public records request.
All these reasons, and “trying to keep things equitable,” meant less money for SkyFest in 2025, Nelson said.
Eighteen applicants vied over $175,000 last year. This year, there were 17 applicants and $185,000. Also, this year’s SkyFest’s rental waiver was denied. So, the lodging tax committee recommended SkyFest 2026 receive $39,960.
“Back to the way it used to be”
For a while, Arlington Municipal Airport served as a stopping point for pilots en route to the Abbotsford International Airshow in Canada. In 1969, rules at the Canadian border tightened restrictions on experimental aircraft.
In protest, pilots stayed in Arlington instead of moving on, Tolbert told The Herald in 2018. Eventually, the Arlington Fly-In became the third-largest aviation event in the country.
In 2021, a scaled-down version of the show returned to comply with public gathering restrictions. A five-day event became a three-day event and its name changed to SkyFest.
“People really liked the format,” Tolbert said in a July interview with The Herald. SkyFest included more booths than before, community activities and a drone show.
However, some members of the Arlington Airport Commission want SkyFest to go “back to the way it used to be,” Blythe said in July. “They just feel that it was leaving the aviation arena and becoming more of a show.”
Tolbert disagrees, she said. “It’s an air show that now includes more innovative shows that displays the future of air.”
Also, the airport commissioners are somewhat frustrated with SkyFest, Arlington Airport Director Marty Wray said in July. “Over the last two years, they’ve been asking for numbers or amount of attendees and that sort of thing as the event’s gotten smaller. We have not received those numbers.”
Tolbert told The Herald those types of requests would need to come directly from the airport director. “We looked through our emails,” she said. “We didn’t find any copies of those requests.”
These reasons were used to deny the rental waiver for this year’s SkyFest, which the council had previously approved the last nine years. Now, these reasons — among others — are also being used to argue the reduction of SkyFest’s lodging-tax funding.
“We would not have these funds”
The lodging tax committee’s recommendations were first presented to the public on July 7. During that meeting, the disagreement between council members began.
Blythe questioned “how many people go to the Arlington Fly-In and stay in the city, and spend money in the city versus some of the other events that are held downtown.”
SkyFest takes place at the Arlington Municipal Airport, located outside Arlington’s city center.
Nelson argued SkyFest deserved the most money because it generated the most total room nights. “We would not have these funds if people did not spend the night in the hotels. Period,” she said.
Council member Yvonne Gallardo provided another argument for reducing SkyFest’s grant. She said it generates sponsorships, ticket sales and other sources of revenue, so it doesn’t need as much city money.
Instead of continuing to give long-standing events large amounts of money, “We could have helped support, and could have helped bring in, more of the events that would help show people who we are,” she said, “that brings them back into town even more.”
The council concluded its July 7 meeting without voting on the lodging tax grant recommendations and requested the committee review the allocations once again. However, the lodging tax committee sent their recommendations back to the council unchanged.
“I want to do it with logic”
During a work session on July 28, the city council revisited the recommendations. However, arguments remained unchanged.
Council member Jan Schuette began by providing a brief history of the lodging tax.
“I’ve been on the council for 12 years, and we’ve discussed this multiple times,” she said. “When it came down to deciding if a particular organization got money or didn’t get money, it was how many people came into town and stayed in the hotels. Because the money comes from the hotels.”
Blythe was on the airport commission for a few years, she said. She pointed out how poor SkyFest’s communication has been with the city. She felt the answer provided on SkyFest’s application regarding the events revenue and attendance was not an “appropriate answer to get $40,000,” she said.
Council member Heather Logan said it seemed the council was singling out SkyFest, especially when another event — Hometown Holidays was recommended to receive $46,960 — more money than SkyFest. She asked Blythe why not reduce both SkyFest and Hometown Holidays’ funding.
“I’m not saying I don’t want to mess with the numbers,” she said. “I want to do it with logic.”
Logan said the lodging tax committee’s process was unbiased, unlike what some council members were now doing by picking and choosing who gets more money and who gets less.
“I’m comfortable with LTAC,” Logan said. “I think they made a good-faith effort to go through their algorithm and come up with this, and I’d like to see some logic in our choices too.”
Blythe argued that SkyFest stood alone as the only event that could control its own revenue by setting ticket prices. Hometown Holidays is a free event and includes various attractions throughout the city.
She recommended SkyFest’s grant be reduced to $20,000. The extra money would then be distributed among the Arlington Farmers Market, the city’s Fourth of July event, the Arlington Street Fair and the Gleneagle Golf Course’s Summerdaze 2026. The lodging tax committee gave high ratings to all of these events.
“The integrity of the committee’s work”
During public comment, Rugtvedt stood before the council on Aug. 4 to defend her committee’s work.
“It felt that the integrity of the committee’s work was being questioned,” she said. “The LTAC committee was established to provide thoughtful, data-driven recommendations based on criteria developed to ensure fairness, transparency and alignment with tourism goals. As volunteers, we dedicate significant time and care to reviewing applications through that lens.”
Blythe’s changes were presented to the council after public comment. The council needed to eventually come to a consensus on what was being officially submitted back to the lodging tax committee, Ellis said.
Before that, city council member Yvonne Gallardo responded to Rugtvedt’s speech.
“I don’t necessarily appreciate being told that I don’t appreciate something or that I’m questioning the integrity of something when I haven’t actually said those words,” she said. “Asking questions and wanting more information does not necessarily mean that I don’t appreciate the hard work.”
Nelson continued to support the lodging tax committee’s recommendations and commented on the suggestions being made by the city council.
“It makes me sad that there are some who choose to pick and choose for their own reasoning,” she said.
If the council wanted to make changes to the committee’s work process, Logan said, it should submit those changes for next year, rather than making adjustments when the committee was following the process given to them.
The members of the lodging tax committee agree, according to a statement provided to The Herald by the three committee members, Michele Heiderer, Rachel Ralson and Rugtvedt.
“If council wishes to revise or update the criteria moving forward, we welcome that discussion,” the statement said. “We’re always open to improving the process. However, any changes should apply to future LTAC cycles to ensure fairness for all applicants.”
Blythe said she wants to change the lodging tax grant application in the future while still aiming to reduce SkyFest’s award this year.
She also responded to Nelson’s comment.
“I resent tossed out allegations that there’s some other reason why I, or anybody else, is bringing this up,” she said. She also noted “the LTAC is an advisory committee by name,” and the council has the final decision.
“We fully recognize that the City Council has the final authority when it comes to approving LTAC funding,” the advisory committee’s statement said. “As a committee, we do not believe that reducing funding for established, high-performing events in favor of redistribution alone is the most effective strategy.”
Taylor Scott Richmond: 425-339-3046; taylor.richmond@heraldnet.com; X: @BTayOkay
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