County’s Tourism Director Points to Inequality in State’s Tax Redistribution

Cape May County tourism generated $637.5 million in state and local taxes in 2023, the last full year of reporting, or $1.75 million per day. Every year the county collects hundreds of millions in taxes through tourism, sending the bulk of it to the state.

Diane Wieland, the county’s tourism department director, said that in 2023, the state’s occupancy tax, which is assessed on lodging and is a significant component of the tourism taxes sent to the state, generated $189 million.

“Of that, $21.987 million – essentially $22 million – was generated by Cape May County,” Wieland said.

The idea behind the occupancy tax was to support arts, history and culture, but the return on investment for Cape May County is small.

“We received $1.3 million in grants for art, history and tourism,” Wieland said. “That is 6% being returned to the county.”

Wieland said that, in comparison, Essex County, which does not generate a lot of tourism dollars, and Salem County, which she described as a small county, each received 106% of the occupancy tax they collected in 2023.

“Smaller counties get more than they generate, and northern New Jersey counties get more than they generate,” she said.

The occupancy tax dollars, she said, are sent to the state, and then some amount is granted back to the counties. The county can issue grants on a competitive basis, and there are entities — she named Cape May MAC, Historic Cold Spring Village, Cape May Stage and the East Lynne Theater Company as examples — that can apply for a share of $200,000 out of the $1.3 million.

“Where is the rest of it going? It’s collected from every visitor on the backs of the hoteliers,” she said.

The local lodging industry sends the tax to the state treasury, and tax dollars are allocated to the state council on travel and tourism for arts, history and culture, then granted back to the counties. Wieland said the amount the state sends back to Cape May County is not enough to market lodging, the very industry that collects the tax. She said of the $189 million generated in the state, only $49 million is returned to the counties.

“Where does it all go?” she asked. “We all need to understand this.”

According to state statute, of the fees collected for occupancies during fiscal year 2004, $16 million was to be allocated to the New Jersey State Council on the Arts for cultural projects; $2.7 million to the New Jersey Historical Commission; $9 million to the New Jersey Commerce and Economic Growth Commission for tourism advertising and promotion, and $500,000 to the New Jersey Cultural Trust.

Twenty years later, that $28.2 million allocated to those four organizations has grown only to $49 million, with the state keeping 75% of the occupancy tax for other purposes.

Wieland said she has never really gotten answers. She said she spoke to someone from the state tourism council who tried to explain that the wording in the law saying the money “shall be allocated” for particular appropriations means it’s optional.

“It says ‘shall,’ not ‘may,’” Wieland countered.

She said the Newark Museum received a million dollars, supposedly because it is a state museum, while Newark doesn’t generate money from overnight lodging; yet counties such as Cape May are supporting the Newark Museum at Cape May’s expense, she said.

Wieland said she has been saying since 2005 that Cape May County is not getting back a good return on its investment.

“I tell our legislators, ‘Do you know how you are being cheated?’” she said.

The Economic Perspective

At the same time, Wieland described a thriving tourism economy in Cape May County, with more than 150 new businesses having opened in the county in 2024, including hotels, food and beverage providers, recreation facilities, a fitness center, arts pavilion, retail shops, a movie theater and breweries. She said there was even more business development scheduled for 2025.

Wieland said the county is expanding the summer season with a fall/winter marketing campaign that started in 2016. She said since that year, shoulder season occupancy tax revenue increased by $2.9 million, crediting special events with spurring the expansion. Since 2016, shoulder season tourism spending increased by 29%, with spring visitation increasing by 36%, fall visitation by 44% and winter visitation by 16%.

Joe Molineaux, the county’s economic development program coordinator, recently gave a presentation to the Chamber of Commerce of Southern New Jersey on the regional economic perspective, where he told chamber representatives, “Tourism is the heartbeat of Cape May County.”

Reporting on 2023 numbers, which is the last full year for which numbers are available, he said direct tourism spending totaled $7.7 billion.

Of that number, lodging accounted for $3.2 billion; food and beverage sales $1.7 billion, and retail sales $1.4 billion in sales taxes. Recreation sales tax raised was $797.1 million, and transportation added $534.6 million.

In a related matter, Molineaux said 58% of all employment countywide was dependent on tourism.

He said the county is investing millions of dollars in improvements to the Cape May Airport, including the addition of the Tech Hangars II project, new buildings including a multipurpose building and plans for a new public hangar.

Molineaux’s report said there is a continued focus on drones, with a vision of the airport’s continuing to expand to include more tech and innovation companies.

Wieland said Cape May County has a year-round population of 95,000 that swells to 765,000 in the summer. The commercial/recreational fishing industry is the county’s second-largest. The Port of Cape May/Wildwood is the largest port in New Jersey, and the second-largest port along the eastern seaboard. Commercial fishing generates $300 million in local economic impacts and ranks fifth in the nation in landings.

Cape May County ranks second in the state in direct tourism spending, generating $7.7 billion in visitor spending, second only to Atlantic County’s $8.1 billion.

Contact the reporter, Christopher South, at csouth@cmcherald.com or call 609-886-8600 x-128.