Photo: Andrew Wardlow/AP
The bed tax never sleeps in Florida
How tourist development taxes should be used has become a running battle in Tallahassee.
In the early 1970s, business leaders in Orlando and Daytona Beach wanted to build convention centers, hoping to attract business travelers to augment their traditional tourism bases.
To fund construction, the two cities decided to seek approval from legislators for a local tax on hotel rooms. At first, they struggled to get traction in Tallahassee, opposed by some tourism interests and also Gov. Reubin Askew, who wanted to save a hotel tax for other potential uses.
In 1976, J. Hyatt Brown, a young legislator from Volusia County, outmaneuvered a powerful appropriations chairman and secured enough pledges to become Speaker Of the Florida House of Representatives. A year later, Brown, a former president of the Daytona Beach Chamber of Commerce, muscled a bill through the Legislature to let counties begin taxing hotel rooms.
Brown’s bill strictly limited how the counties could spend money raised by the new “tourist development tax.” They could use it to build or renovate convention centers, sports stadiums or auditoriums or to promote more tourism through advertising or convention bureaus.
In getting the bill passed, Brown rebuffed efforts by lawmakers from other coastal areas who wanted to use money from the tax on beach-related projects. Brown, who worried there wouldn’t be enough money for his convention center if the permitted uses for the tax weren’t limited, got what he wanted: Daytona Beach today has the Ocean Center, and Orlando has the 7 million-sq.-ft. Orange County Convention Center, both financed with tourist development taxes.
But that initial skirmish over the allowable uses for tourist tax money was a harbinger for what’s become a 40-year slugfest.
Eight years after creating the bed tax, the Legislature gave the coastal lawmakers what they’d wanted, rewriting the statute to let counties spend it on improving, maintaining and renourishing beaches.
And since then, state lawmakers have expanded the use of the tourist development tax at least 15 more times — nearly once a year on average over the past two decades. Counties today can spend bed taxes to refinance debt, clean up lakes and rivers and build museums, zoos, aquariums and spring training facilities. Sixty of the state’s 67 counties can spend the tax on fishing piers and nature centers; the Florida Keys gets to use a portion of bed tax to buy land for environmental preservation or affordable housing.
Attorney general opinions, meanwhile, have cleared the way for even more uses, allowing counties to spend the money on restoring coastal reefs, building boat ramps, beach pavilions and nature trails, erecting war memorials and buying oceanfront land.
The steady erosion of limits has infuriated tourism industry leaders, who want the tax maint ained as a means for promoting tourism.Industry lobbyists have long argued that every $1 spent on tourism promotion generates about $3 in sales tax collections. “Every time we come up for air, somebody has a brilliant idea of how to use the money and it has nothing to do with marketing and advertising,” says Carol Dover, president and CEO of the Florida Restaurant & Lodging Association.
But supporters of expanding the tax argue that circumstances have changed since the tax was created in 1977. Back then, economists expected the tax would raise $30 million statewide. It is projected to raise nearly $800 million this year.
Meanwhile, the state itself is spending more than ever on tourism promotion. State lawmakers have given Visit Florida, the state travel-advertising agency, $466 million over the past 10 years.
Some economists argue that it does not make sense to continue subsidizing tourism because the industry creates a disproportionate number of low-wage jobs and leans heavily on part-time and seasonal workers who lack benefits and often rely on government support. Mark Soskin, an associate professor of economics at the University of Central Florida, says Florida would be better served spending tourist development taxes on local needs or economic diversification.
“Just like with oil in Saudi Arabia, it’s supposed to be a means to an end,” Soskin says. “We economists know that if you have a tourismbased economy, you’re condemned to be poor.”
Attempts to expand the tax have become some of the most intensely fought battles in Tallahassee every session. In recent years, for instance, the tourism industry batted back one proposal by Key West to let Monroe County spend more of its bed tax building affordable housing for service-sector workers. Lawmakers also thwarted an effort by the Fraternal Order of Police to let counties use some of the tax to pay for police protection in tourist districts.
But the industry may have just experienced its most important loss yet — to Okaloosa County in the Florida Panhandle.
Okaloosa has a population of just over 190,000 and an economy that depends on tourists visiting its Gulf of Mexico beaches each summer. The sun-seekers can stretch local government services to its seams: The Okaloosa County Sheriff’s Office says call for service soar 1,100% during the tourist peak.
In 2013, Okaloosa lawmakers — including Sen. Don Gaetz (R-Niceville), a former Senate president, and his son, Rep. Matt Gaetz (R-Fort Walton Beach) — began trying to get a bill through the Legislature to let the county spend a portion of its tourist tax on public safety services, including police, fire and lifeguards.
This year, Matt Gaetz cobbled together a larger package with sweeteners for some of the tourism industry’s most influential players, including Walt Disney World and Orlando hotelier Harris Rosen.
Many tourism interests, including the restaurant and lodging association, remained opposed, and the package collapsed. But in exchange for giving up, the Gaetzes won approval for a narrower measure allowing three Panhandle counties — Okaloosa, Bay and Walton — to begin spending up to 10% of their tourist development taxes on public safety services used by tourists.
It’s one of the first examples of the tourist development tax being extended into local government services that have traditionally been paid for with property taxes.
Tourism interests don’t expect efforts to grab chunks of the bed tax to end there. “When is it going to stop? The tourists use the roads. Are we going to get into road building?” Dover says.