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Cover 08/14

How the tourism industry and politicians keep Florida’s tax money from being spent where we need it most

State law does not allow tourist tax dollars to do anything but promote more tourism. The tourism industry wants it to make sure it stays that way

Photo: , License: N/A

Photo: , License: N/A



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Dyer’s office called it a “win-win-win for all the partners involved.”

 

In the beginning, back when Walt Disney was surreptitiously gobbling up swampland in Central Florida, there were no hotel taxes, at least not in most of the state. (Dade and Broward counties levied resort taxes.) But after Disney World opened its gates in 1971, drawing nearly 11 million visitors its first year and quickly becoming the anchor of a burgeoning attractions industry, the lodging community started lobbying Tallahassee with a proposal: They’d agree to a hotel tax if the state used that money to promote their interests.

The result was the 1977 Tourist Development Act, which gave counties the option to charge a 1 or 2 percent tax on hotels and other short-term accommodations. Per the industry’s demands, that money could only be used to advertise tourism and build and improve convention centers and sports facilities.

Orange County moved swiftly. In April 1978, county voters approved the 2 percent tax, which in its first year generated $3 million. By 1983 it was $6.6 million – then, as now, the largest collection in the state. The tax’s priorities were codified in the county code: the convention center, marketing and the original Orlando Arena. Decades later the downtown venues were added, with a pittance left over for cultural amenities like United Arts and the Orlando Science Center.

Over the years the state has allowed counties to expand their tourist tax: 1 percent for professional sports here, 1 percent for “high-tourism” counties there, and so on. The funding formulas became more complex. Some counties could charge more than others, and even today a couple opt not to have a tax at all. Orange County maxed out its tourism tax revenue in 2006, going to 6 percent as a prelude to the downtown venues deal. (The extra revenue was split between the venues and tourism promotions.) That year, the county collected $137 million in tourist taxes. In 2012, it was $177.6 million. In the 2013-2014 fiscal year, the state projects that Orange County’s haul will be $190 million, by itself nearly a third of the state’s expected $645 million take.

The local tourism industry, meanwhile, is recovering apace from the recent recession. “We’re the only destination in the history of the United States that has proudly featured 50 million visitors for three straight years,” Maladecki says.

Tourism generates more than $71 billion a year in statewide revenue and accounts for 23 percent of the state’s sales taxes, which is, as Maladecki points out, a big reason we don’t have an income tax.

In the industry’s view, the status quo is working just fine, and there’s no reason to mess with it.

 

"People have to look at, what is tourism about, and is it serving the local residents?” says Mark Soskin, an associate professor of economics at UCF. Soskin is an outspoken critic of public subsidies for sports facilities, including the Citrus Bowl and proposed soccer stadium, which he says – and the economics literature overwhelmingly agrees – does little or nothing to stimulate local economic growth.

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