It’s Raining Taxes: Despite Rising Revenue, County Considers Increase in Bed Tax to 4%

Despite an increase in revenue this year over last (at least through May), Flagler County’s government is considering raising the county’s 3 percent bed tax to 4 percent. The County Commission last raised the tax in 2003, when it jumped 1 percent.

Through May, bed tax revenue this year was up 3.7 percent over last year, to $490,000 (compared with $473,000 at that point last year), despite the slower economy. That was before the Deepwater Horizon/BP oil spill.

The bed tax, or resort tax, is levied on all accommodations at hotels, motels, apartment hotels, rooming houses, RV parks/campgrounds, and condominiums where individuals stay six months or less. It’s in addition to a 7 percent sales tax. The bed tax, which raised $787,000 last year, is administered by the Tourist Development Council, with the approval of the county commission. The money is spent on building or maintaining tourist attractions, underwriting and promoting events and festivals that draw tourists who actually stay in local hotels and motels, and on beach restoration.

The timing of the proposal is problematic: The county, the school district and Flagler Beach are all raising their property tax rates significantly to make up for collapsing property values. The school board just voted to put a 25-cent property tax to a November referendum (though that tax is not new: it merely continues a levy that residents have been paying for years, and that preserves some $2 million in revenue used to pay for daily school operations.) And the Flagler Chamber of Commerce continues to lobby for its own 25-cent “economic development” tax (cloaked as an Enterprise Flagler proposal, though few people know what Enterprise Flagler is or does), also on the November ballot, even though the chamber’s own focus groups show the tax to be a lost, if not divisive, cause. The accumulation of tax proposals and tax increases, relatively modest though they are, combined with a sour national mood over the lousy economy, is swelling a backlash against all taxes, whatever their purpose. An increase in the tourist tax would be further ammunition in the brooding backlash’s arsenal.

Bed-tax revenue spending is itself mired in some controversy at the moment, following the county commission’s approval in early July of a $150,000 allocation to Marineland to subsidize building boat docks for a mostly private marina—in a town whose residents could all fit in a single sloop. The Tourist Development Council had actually recommended a $75,000 allocation. In a split vote, the commission doubled the amount, largely at County Commission member Milissa Holland’s behest.

Holland, who’s taking severe criticism over that decision (and who is the chairwoman of the Tourist Development Council), is holding a community meeting on Aug. 23 at the Palm Coast Community Center to explain (and presumably defend) the decision. (The meeting begins at 6 p.m.)

Bed tax proponents stress that the tax does not impact local residents. But that depends on how the notion of “local resident” is applied in a county that relies heavily on snowbirds who divide their time between homes in Flagler in winter and further north in warmer months. Those short-term residents (who don’t own homes here, but rent them short-term) also pay the tax. Still, Flagler’s tax compared to other counties is not high.

St. Johns County has a 3 percent bed tax, first approved at 2 percent by voters in a 1986 referendum (it had been rejected three times before that). That referendum included an allowance for an additional 1 percent, which the St. Johns County Commission added in 1991, requiring the money from that additional percent to be devoted exclusively to advertising. Volusia County (where the tax was originally assessed in 1978, but at a lower rate) has a 6 percent bed tax. Half of the revenue is considered a tourist development tax like Flagler’s. The other half is used for advertising and to pay the administrative costs of convention and tourist “bureaus” or information centers. Broward has a 5 percent bed tax, Orange County, where Disney is located, is at 6 percent, so is Miami-Dade.

In late July, the county administration asked County Attorney Al Hadeed about the commission’s ability to levy an extra percent. A fourth percent is authorized by law, Hadeed replied in a memo, and may be added with a simple majority vote of the county commission—not a referendum. The commission would then have to specify in the Tourist Development Council ordinance what the additional money would be spent on, such as advertising or subsidizing events and festivals.

In an unrelated matter, long-time Tourist Development Council member John Seibel, who owns the Thunder Gulch Campground and the Black Cloud Restaurant, announced his resignation. The county administration received his resignation letter on Aug. 3.