Tourist Tax Increase Clears Key Hurdle With 4-1 County Commission Vote

The Flagler County Commission this morning voted 4-1 to push ahead with a public hearing on raising the tourist tax from 3 percent to 4 percent. The vote, with Commissioner Barbara Revels dissenting, is a victory for Commissioner Milissa Holland, who’s equating tourism development with economic development. That development hinges, in Holland’s view, on stepping up Flagler’s tourism-marketing prowess beyond the county’s borders to attract more visitors and appeal particularly to “eco-tourists” big on beaches, trails and greenery.

It’s in the commission’s authority to raise the tourist tax unilaterally, without a public vote–but not without a public hearing. That’ll be next, though the commission hasn’t scheduled that hearing yet. And Commissioner Alan Peterson, who lent his vote to the measure, said he was doing so only if the formula allocating tourist dollars was redrawn, shifting some of the overall dollars allocated to advertising to other uses, such as beach preservation.

The 3 percent tax currently in effect would generate some $850,000 this year. The additional 1 percent would add $275,000 to that, assuming a slight increase in overall revenue next year. The money subsidizes tourism advertising, local events (such as festivals or sports competitions) that have a proven ability to draw tourists who stay overnight, construction or repairs of tourist-drawing infrastructure, and beach protection.

Marketing and promotion takes the lion share of the money–55 percent at the moment. The additional percent would go entirely to that pot, swelling the marketing share further (to just over 66 percent). Construction or capital projects’ share would fall to 22.5 percent, beach preservation to 11.25 percent, though the net amount of dollars allocated to those two funds would not decrease–especially if the overall revenue trend continues to increase. Next year’s tourist-tax revenue is expected to be $1.1 million.

“My excitement about how we’re really focusing more and more on these efforts and certainly seeing these proven results is, we’ll be able to promote a destination market even further,” Holland said. “We’re in a different kind of market, the studies have shown we’re in a niche market, we have the availability to create packages, we have the ability to draw more from different tournaments, and in an effort to do that we need more dollars to put back forth this ongoing, moving effort that Ms. Heiser has established.” Peggy Heiser heads the county’s tourism development efforts.

Revels, who’s supportive of the Tourist Development Council’s existing budget and priorities, opposes increasing the tax on two grounds: bed taxes aren’t–as its proponents claim–paid entirely by visitors; and more taxes right now are ill-timed.

“A lot of people believe that increasing tourist development, TDC taxes, that it gets paid by visitors, and that’s not always the case,” Revels said. “When you have a market that we have today, and we have small operators, and even some large operators, if they have to promote their rooms, in many case they may themselves pay that fee, that added tax, so as to remain competitive. I think that, it’s been stated to me, well, if you had a $250 hotel room bill, that that’s on $2.50 we’re asking to increase this. But when you figure that you’ve already paid $25 on 2qop percent sales taxes on that room, and now you add another $2.50, it’s a lot of money, and I think that there are times when just increasing taxes just becomes regressive, and I just oppose this.”

Holland had two supporters prepared to address the issue.

Pam Walker, a member of the Tourist Development Council, said what she’d said last month on the council in support of the measure: “People come to a destination for the destination. If the hotel-motel tax is 2 percent, 3 percent or whatever, that doesn’t figure in their great plan of thing, because they come for a destination. And if we add that 1 percent to our marketing dollars, that in itself is going to add to our tourism base coming to Flagler County and will put more money in the coffers.”

Walker was only half the Holland arsenal. Dave Bonfleur, vice president of marketing for Caiman Management, which owns three big local hotels (Best Western, Hampton Inn and Holiday Inn), was the other. The three hotels add up to 225 hotel rooms, mostly filled by interstate travelers. “They have no idea what our tax rate is before they check in and when they check out,” Bonfleur said. “Ive talked to thousands of guests, and I’ve never had one conversation about what our tax rate is. It’s just a given that your tax rate is your tax rate.”

Revels, unbowed, pressed on, returning to the issue of hoteliers who evade the law, undercutting others in the field. Other commissioners seemed unconcerned.

“That is a very, very competitive business right now, and a lot of inquiries come into those facilities through a lot of websites,” Revels said, “and people go to those sites and ask for price quotes, and they’re getting for price quotes from an individual owner. In many cases, in this county I’m sure, these people are not paying their bed tax. They’re illegally running their unit and they’re not doing it as a short-term rental. But when that occurs, when people are comparing those numbers, somebody who is paying the tax has got to lower their price to match whatever to get any kind of a rental. They’re paying the additional tax themselves I know, I’ve got one of those, I know that that is going on. So that’s my complaint about it, is that when people are checking competitively—I’m not talking about the overnight stay at the Interstate, I agree that people are oblivious to what they’re paying in a tax—but when it comes to staying for an extended stay, which is what we portray that we want, we want them here for a week, two weeks or a month, they’re checking what their total cost will be.”

“Believe it or not,” said County Commission Chairman George Hanns, ending the matter, “some people actually stay overnight just to watch the county commission reruns in our hotels.”

In a related matter, the county commission approved the Tourist Development Council’s $650,000 marketing-fund budget, an increase of $145,000 over the current year. The additional money will hire additional staff (costing an additional $63,000) and increase advertising spending from $256,000 to $305,000.