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
Published: August 14, 2013
So even if Tallahassee changed the law, even if Orange County could use tourism taxes for public services, there’s no money left to spend.
This problem has a simple solution: Raise the rate. Every percentage point of hotel taxes in Orange County generates about $30 million, give or take, in annual revenue. If the hotel tax were raised from 6 percent to, say, 10 percent, that would amount to $120 million a year that could be set aside for infrastructure, roads, cops, schools or whatever else we choose. This is real money: Lynx, our public transportation agency, has an annual budget of $116 million; the Orlando Police Department’s is about $117 million.
Maladecki, of the Central Florida Housing and Lodging Association, isn’t keen on this idea. Tourism would suffer, he says. “It would put us at a competitive disadvantage. Why would we want to do this as an industry?”
The hotel tax rate here, however, is lower than in other tourism destinations. New York City, for instance, charges about 15 percent in hotel and sales taxes. Washington, D.C., 14.5 percent. Hawaii, 13.5 percent. Las Vegas, probably our closest analogue, levies a 12 or 13 percent tax, depending on the district.
Orange County’s rate, once you factor in sales taxes, is 12.5 percent. An average night’s lodging in the metro Orlando area, according to Visit Orlando, is $96.88. Raising tourist tax by 4 percentage points would tack on $3.88 to the bill.
We should also look at the broader picture: Earlier this month USA Today published an analysis of travelers’ tax burdens throughout the country – not just hotel taxes, but also sales taxes, rental car taxes and other fees tourists often don’t notice. In Chicago, tourists pay an average of $40.31 a day; in New York City, $37.98; in Seattle, $34.43; in Nashville, $34.13. In Orlando, they’re charged $24.50, one of the lowest rates in the U.S. As a result, New York generates $300 million more in tax revenue from $57 billion in tourist spending than Florida does from $71.5 billion.
Slightly higher hotel taxes won’t scare tourists away, at least no more that Disney’s or Universal’s annual price hikes do. They’ll merely put us closer to the national average – and in the process, they just might make Central Florida a better place to call home.
Florida is 43rd in per-pupil education spending. Twenty-six percent of its roads are of poor or mediocre quality. Seventeen percent of its bridges are structurally deficient or functionally obsolete. It needs $33 billion in drinking and wastewater upgrades over the next two decades and another $9 billion in school infrastructure improvements, according to the American Society of Civil Engineers. It also leads the nation in foreclosures.
Orlando is commonly ranked among the country’s most dangerous cities, ahead of Baltimore and Detroit and Miami, with violent and property crime rates that double or triple the national average. Lynx is almost criminally underfunded. The region is encumbered by a low-wage service economy, which begets all sorts of problems associated with poverty. And notwithstanding recent improvements, we still face a housing crisis.
These are needs. The venues are wants, amenities that will make life here more enjoyable for some people. The wants get funded while the needs linger because, politicians tell us, the tourist-tax law gives them no choice. (“There are some real restrictions on what we can do,” Mayor Jacobs said in last week’s county commission meeting.)
“Local officials love having their own hands tied,” Maxwell says, “so they have an excuse to throw money at sports buildings without the accountability that would accompany the spending if the money could otherwise go to cops or schools.”
This issue is bigger than the venues, though. Rather, it goes to the very heart of what kind of community we want to be.
“Tourism is generally bad for an area,” Soskin says. “The reason an area tolerates tourism is because it generates funds for the rest of the economy.”
This is our deal with the devil. It’s time we get our money’s worth.
> Email Jeffrey C. Billman