Small County Takes on Tourism Industry Over Control of Bed Taxes

(Source: The Orlando Sentinel, April 22, 2013)

Backed by the president of the state Senate, a small Florida county is challenging the state’s tourism industry over how it can spend its hotel taxes.

Okaloosa County, a coastal Panhandle community whose economy relies on tourists visiting its white-sand beaches, has asked the Florida Legislature for the ability to use its “tourist development” taxes to pay for lifeguards and beach patrols.

The move puts the county of fewer than 200,000 people on a collision course with major Florida tourism businesses, who have for years aggressively lobbied against efforts to give counties more freedom over how to spend the tax they charge on hotel stays.

Under current law, counties are forced to spend hotel-tax dollars primarily on things that generate more tourism, such as travel advertising and convention centers. Industry executives want to keep it that way.

But Okaloosa County has enlisted an influential ally: Senate President Don Gaetz, a Republican who represents the region in the Legislature.

Gaetz said it makes sense to pay for lifeguards with tourist taxes.

“I think there’s a hard-wired relationship between safe beaches and tourists going to beaches,” said Gaetz, R-Niceville. “I can tell you, living in a coastal county, that one of the things that you never want to have advertised in Alabama, in Georgia, in Tennessee … is a drowning and media reports that there wasn’t a beach patrol and there weren’t lifeguards.”

Forcing counties to cover those costs with property taxes or some other revenue source drains money that can be spent directly on local needs, such as police, parks and sidewalks.

“Taxpayers do have a point that they want their tax money to be used for critical services that benefit the county and its residents,” Gaetz said. “And if there are special services that have a disproportionate benefit to tourism, maybe that’s what the tourism-development tax ought to do.”

The issue arose in Okaloosa after an embezzlement scandal that led to a state audit of the county’s bed-tax finances. Among the many findings: Okaloosa had inappropriately spent $2.5 million during a two-year period to pay for lifeguards and beach shuttles, because such expenses were not explicitly allowed under Florida law.

At Gaetz’s request, the Senate Appropriations Committee last week inserted a provision into a broad tax-administration package (SB 1828) that would authorize Okaloosa County to use hotel taxes on “beach-safety personnel and lifeguard operational activities” at public-access beaches.

The initial version would have made an exception only for Okaloosa. But Gaetz said it will soon be rewritten — likely this week on the Senate floor — to include any county with a population of less than 250,000. That would include about 20 counties across Florida, from Nassau County north of Jacksonville to Monroe County in the Florida Keys.

Gaetz said he wants to help smaller counties because they typically have tighter budgets. But he said he “certainly would be open” to expanding the language to include all coastal counties, such as Volusia County, which spends about $7 million annually from its general fund on beach safety.

Brevard County currently spends about $1.3 million a year in general-revenue property taxes on lifeguards, Commissioner Trudie Infantini said. Using hotel taxes instead would free up money to help local residents, she said.

“Perhaps we could have more firefighters or … maybe there are a few more roads we can pave,” she said. “Or you could not tax your residents as much.”
Tourism lobbyists are now scrambling to defeat the legislation.

“We are educating lawmakers on the importance of preserving these funds for tourism marketing,” said Robert Skrob, executive director of the Florida Association of Destination Marketing Organizations. The group’s members include Visit Orlando and other agencies that are subsidized by county hotel taxes.

The industry’s ultimate fear: Any expansion of the bed tax could add momentum to efforts in other parts of the state — particularly tourism-rich Central Florida — to spend hotel taxes in ways that more directly benefit local residents.

Orange County, for instance, employs a dedicated team of sheriff’s deputies to patrol the International Drive tourism corridor. It also operates fire stations by the Orange County Convention Center and by SeaWorld Orlando. All are funded with property taxes.

The industry has crushed similar legislation in the past. In 2008, Monroe County and the city of Key West tried to persuade lawmakers to give them more freedom to spend hotel taxes building affordable “work-force housing.” They won the support of then-state Rep. Dean Cannon, a Winter Park Republican who would become House speaker, yet the legislation still failed.

Cannon is now a lobbyist in Tallahassee whose many clients include Monroe County.

“We do not support bed-tax dollars being used to fund lifeguards,” said Carol Dover, president of the Florida Restaurant & Lodging Association, whose members include Walt Disney World and Universal Orlando, among many others. “We cannot support an erosion of its intent such as this.”

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