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Flagler Increases Tourism Tax to 5%, Benefiting Beach Fix, Then More Promotions

| March 21, 2017

tourism tax revenue flagler county 2002-1018

Tourism tax revenue in Flagler County over the years. The revenue is drawn from a surcharge on the county sales tax. The surcharge is applied to hotel, motel, RV and other short-term rental charges only, and paid mostly, but not entirely, by visitors. The surtax was 3 percent until it was raised to 4 percent in 2010-11. The Flagler County Commission Monday evening approved raising the tax to 5 percent. In the graph above, 2016-17 revenue is estimated on eight months of the year bringing in revenue from a 4 percent tax, and the last four months from revenue at 5 percent, since the new rate becomes effective on June 1, and the fiscal year ends Sept. 30. The 2017-18 revenue is an estimate, based on an expected revenue of $2.5 million, plus 3 percent, a conservative expected increase in collections. Click on the image for larger view. (© FlaglerLive)

Compelled by beach repairs needed in the wake of Hurricane Matthew, the Flagler County Commission Monday evening approved increasing the county’s tourism tax in a 5-0 vote. The additional sales tax on hotels, motels, RV’s and other short-term rentals will go from 4 to 5 percent starting June 1, increasing revenue to the county’s three tourist funds from $2 million to $2.5 million.

For a year, $1.5 million of that revenue will go entirely to beach repairs, though by year three of the plan the share going to beach repair will fall to $500,000, while the share going to tourism promotion, advertising, salaries and travel will increase to $1.5 million a year, up from a little over $1.3 million currently, realizing the increase to that fund that County Administrator Craig Coffey and Tourism Director Matt Dunn have long sought.

A third fund, capital improvements for tourism-related projects, will get zero dollars in year one, rising to $500,000 by year three. In essence, both the capital improvement and beach funds will see permanent revenue increases, but so will promotions, even as promotions was the largest of the three as it is—and the most accountably opaque.

“This has been said, I think very mistakenly that this is a secret plan to increase funding” to the promotions fund, Coffey told commissioners Monday, without—as is usually the case with Coffey’s straw men—more specifics. “I mean, it’s not a secret plan, it is a plan to increase funding.” He then broke down the various funds’ revenues as stated above.  “The majority of your new money, is going into the beaches, despite whatever everybody wants to say out there. $175,000 will go to promotions and advertising, but that does not necessarily mean, after year three, that there’s an increase in spending there.”

Coffey’s prevarications aside, it unquestionably means that the revenue going to the promotions fund will be permanently increased by next year.

And Coffey himself moments later admitted that he’s been looking to increase the promotions budget all along: “When we were discussing this fifth cent a year ago, we weren’t discussing—we were discussing leaving beach [fund] the same at that time,” he said, with promotions obviously getting the largest share of the new revenue. “So there’s been a major shift,” Coffey said.

But the shift was forced on the county by Hurricane Matthew, with about $7.5 million in local revenue needed to match state dollars in order to accomplish significant beach and dune repairs up and down the Flagler coast, and with $2 million of the new revenue pledged to Flagler Beach’s repairs.

Once that’s done, the “fifth cent,” as commissioners have referred to the tax, will still be in place, as will the original plan to devote most of that fifth cent’s revenue to promotions. That fund has been growing inexorably for a decade and a half.

It is the second time in six years that the county commission has raised the tourism tax. It was last raised at the urging of then-Commissioner Milissa Holland, now the mayor of Palm Coast—ironically, to better fund the promotions budget, though that budget at the time was structured differently. It was more strictly regulated and accounted for, and there was no such thing as “discretionary event funding,” which now consumes upwards of $300,000 and is spent on so-called “bidding fees” to subsidize mostly private, for-profit organizations by enticing them to hold events in Flagler County.

Monday’s vote doesn’t change the promotions budget, which is around $1.6 million currently (up from just under $1.4 million when commissioners approved the budget last fall). Rather, it changes the revenue going into the promotions fund. The promotions fund has a significant reserve, and will make up the difference by drawing down that reserve over the next year.

The beach revenue will be added to another $500,000—for a total of $2 million—to reduce the debt load the county expects to take on as it borrows money for beach repairs. The commission Monday evening also approved shifting that $500,000 from tourism’s capital improvement fund’s reserves to the beach fund.

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