Flagler Seeks to Raise County’s Tourism Sales Surtax to 5% to Help Pay for Beach Restoration

Flagler County’s tourism sales surtax of 4 percent will very likely increase to 5 percent next year as the county looks to double revenue devoted to beach restoration in the aftermath of Hurricane Matthew. The County Commission will get the proposal to raise the tax, which was last raised in 2011, in January, with a vote likely scheduled in February, County Administrator Craig Coffey said today.

The sales surtax is currently an additional 4 percent added to the regular sales tax of 7 percent. The tourism tax is levied only on charges for hotels, motels, and short-term rentals, so it is paid overwhelmingly by visitors, not local residents.

The surtax generates about $2 million a year. It is split three ways: $450,000 of that, or 22.5 percent, goes to capital projects that improve the county’s tourism draw, such as repairs to the Flagler Beach Pier, improvements or new ballfields, and so on. $1.33 million, or 66.25 percent, goes to marketing the county, and paying for the county’s tourism office staff, which devours a considerable portion of that pot. And 11.25 percent, or $250,000, is devoted to beach protection. That proportion was 15 percent until 2010, when the county commission voted to lower it to 11.25 percent at the time of adding the extra penny to the surtax.

The Tourist Development Council is the advisory board appointed by the county commission and responsible for overseeing tourism dollars and recommending to the county commission how those dollars should be spent. The TDC for the past few years has largely been a rubber-stamping body, little interested in oversight or strategy. It defers to the county’s tourism bureau and its director, Matt Dunn, who takes his marching orders from Coffey.

The fifth penny surtax would generate an extra $500,000. Flagler County Commission Chairman Nate McLaughlin, who also chairs the TDC, is supportive of the tax increase, with a condition: “I know as one commissioner, one vote, going forward I would want to earmark this penny for that fund,” McLaughlin said of the beach restoration fund this morning in a TDC meeting. That would increase revenue for beach restoration to $750,000 a year. “I understand a portion of that would even be bondable, so if we have to go out and borrow $2 million for today, we could bond against that income or that revenue. So the more this group talks about it, the more we have the press getting that message out there that this is an important element of this fix. That’s how quick it’ll move.”

But Coffey doesn’t want to devote the entire new penny to beach restoration, even though he was before the TDC this morning to seek approval to spend $165,000 out of that fund for ongoing beach-recovery efforts (the county has blown through its reserves as it recovers from Hurricane Matthew, and waits reimbursements from FEMA, the Federal Emergency Management Administration).

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Differences in priorities over whether to devote all the new revenue to beach restoration or not.

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Dunn and Coffey have been looking to raise to tourism surtax for several years. But they’ve been wanting to do so to further enlarge money devoted to the marketing pot Dunn controls (and out of which he’s paid), with a bit more going to capital projects—not to beach restoration.

Coffey now recognizes that the hurricane has necessarily changed that approach. But he sees the new necessities as an opportunity to increase funding in all three tourism funds, not just the beach restoration fund. “So if you added another half million dollars so your collections went from $2 million to $2.5 million,” Coffey said, “and you went 20 percent capital, 20 percent beach, and then [60 percent] marketing, you’d have a good mix there, you’d get double your money in the beach and you’d sprinkle a little bit more in those accounts.”

He did not explain why the marketing arm of the county still needed more money at a time when it’s run up five straight years of increased tourism-related tax collection, and when Coffey himself is projecting at least $57 million in needed beach-related restoration projects over the next many years, with, by his own account, only so much available in state and federal aid.

“If we get thrown in DEP land,” Coffey said, referring to the Florida Department of Environmental Protection, which could fund some beach restoration projects, “50-50 match, so let’s say it’s $25 million or it’s $57 million, I don’t have $12.5 million, I don’t have $30 million to match that, so we’re going to try and match what we can off of what we can match with private dollars and multiply their money, we’re going to make our case to FEMA,  that’s going to be our best case.” The rest would have to be local dollars, such as those available through the TDC fund.

Coffey’s appearance at the TDC this morning had nothing to do with increasing the surtax. That was to be a discussion for January. But Palm Coast Mayor Milissa Holland, who was sitting in her first TDC meeting as Palm Coast’s representative since she had chaired the panel for several years until 2012—when she had championed raising the surtax the last time—raised the question.

“I can’t think of actually a more important issue than restoring our beaches and actually saving our beaches,” Holland said. “It is without question probably the Number One economic driver for tourism in this county. Without it, I would hesitate to say we have a beautiful community, but lacking a beach would be a substantial hit for us as a community. So anything we can do to further that, I would advocate for.” Then she moved into just such advocacy: Any thoughts with regards to the tourism office increasing the beach restoration fund and changing percentage of fund allocated? She asked Coffey. “This is a resource that we could really tap into if it’s done very strategically, and we look at the percentages and figure out which number we can allocate for this particular purpose,” Holland said.

The question looked so scripted for Coffey that even he was surprised: “For the record, I did not prompt Mayor Holland to ask me that question,” Coffey said. He then went into the details of raising the tax, and referred to a brief discussion at the county commission Monday on the subject.

“What’s good about that is, it really does, it’s very targeted, it goes toward this beach solution, because it is going to be multi-year,” Holland said, though she did not address the proportion of the extra penny to be devoted to beach restoration. She only implied it.

And there’s little question that the TDC will approve that increase, as will the county commission, though the county commission must approve it by a super-majority of four votes. It currently lacks a commissioner, as Gov. Scott is dragging his feet making an appointment to replace the late Frank Meeker. Coffey said he would not bring the proposal to the commission until it’s a full board.

“I can tell you, it’ll move quicker than it has historically, because of the nature of what we’re going to use that money for,” McLaughlin said. “I think we’ll be pushing on an open door here.”

“Personally I think we need to move as fast as we can on this,” Kurt Allen, a TDC member and the general manager at Marineland Dolphin Adventure, said. “We cannot rely on state and other moneys, we need to do whatever we can ourselves, and whatever we’re going to get from them we’re going to get from them regardless, but we need to start thinking about how do we support ourselves, and if this is an easy way to raise a half a million dollars, we need to do it yesterday.”

“I concur with the expeditious movement of this but I would also caution that we don’t want to move so fast that we do miss out on collaborative relationships with the state and federal government,” Holland said. “Particularly the state. There’s no doubt about it that we are on Gov. Scott’s radar as far as our beach and our coastline. He certainly helped tremendously by expediting the opening of the roadway, and I think he demonstrated his support of this community by doing so. But it is very technical and I certainly appreciate the county’s policy moving forward by trying to pull in as many collaborative partnerships as possible, because the more buy-in you have from different stake-holders in the community demonstrates to both the state and federal government that this really is a community-driven exercise.”

That means ensuring that Flagler Beach and Beverly Beach are on board with the plans, she said.