League Learns of Occupancy Tax Distribution Woes

COURT HOUSE – Those old enough to recall watching TV in 1984 may recollect a Wendy’s hamburger commercial that featured octogenarian Clara Peller who asked “Where’s the beef?” Diane Wieland, Cape May County tourism director, asked virtually the same question March 25 before the Cape May County League of Municipalities. Her topic wasn’t beef in a burger, but the county’s dismal return on its occupancy tax.
If returned occupancy tax dollars, sent to Trenton, were beef, surely the county’s bun would scarcely be filled with what returns to feed its lifeblood of tourism.
According to Wieland’s figures, the county sends $1.4 million daily to Trenton in state taxes. In 2013, the tally for those tourism sales taxes amounted to $511.4 million, a 4.2 percent increase over 2012. She noted the county accounts for 11.1 percent of the state’s tax. The total was up from 2012 when it sent $490.7 million to Trenton, and in 2011, $482.3 million.
As mayors and other elected local officials watched Wieland’s PowerPoint presentation at Bellevue Tavern, it quickly became apparent the county, indeed the First District was feeding its vote-heavy northern peers.
According to Wieland’s presentation, Cape May County generates the fourth highest amount of occupancy (overnight stays) tax in the state at $8,017 million, yet it gets back $854,722, of 10.6 percent, third lowest return in the form of grants through arts, history and tourism.
Regardless, there was $5.5 billion spent in the county on tourism-related expenditures.
How could the county improve its return on investment? Wieland asked.
She noted the occupancy tax funding formula “is flawed.” Arts and history funding is double the amount of funds slotted for tourism promotion. She said the occupancy tax is generated through overnight stays, yet it does not require arts and history to market those extended stays.
Wieland cited three bills currently in the Legislature that could bolster the county’s return on investment:
• A 2776 would allow for counties to get excess occupancy tax for tourism promotion. This bill was introduced Feb. 27 with Assemblyman Samuel Fiocchi (R-1st) as sponsor, who attended the league meeting.
• A 935 would allow for excess occupancy tax to be allocated to tourism, arts and history. This bill was introduced by Assemblyman Chris Brown (R-2nd) of Atlantic County.
• S 1133 would increase state hotel and motel occupancy fee revenues required to be annually appropriated to fund certain arts and cultural, historical, and tourism-related programs and activities. Sen. Jeff Van Drew (D-1st) is one of its co-sponsors.
Jobs generated from tourism in Cape May County in 2013 amounted to 25,479, more than in 2012, when the number was 24,463 and in 2011 when it was 23,847.
She stated there were 12.4 million visitors into the county last year with roughly half those staying either overnight or on day trips.
Through December 2013, the county’s hotel occupancy tax collection rate was $8.1 million. That was a loss of just under 1 percent over the previous year, she said.
In June 2013, occupancy tax collection here was down $93,926, likely an early response to those who thought Superstorm Sandy had devastated the county’s beaches and coastline.
After the “Stronger than the Storm” state-funded advertising campaign, which featured Gov. Chris Christie on beaches and boardwalks, revenues began to increase. From mid-July through November, the collection rate rose $25,578 in August, $37,403 in September and $32,124 in October. November, not a stellar month for tourism in the county, the collection was up $4,964.
While neighboring states have far larger advertising budgets to lure prospective tourists, a great deal of tax money generated by tourism funds non-tourism programs, and that gripes Wieland.
She cited $511.4 million in tourism generated sales tax, $28.8 million is awarded to three entities the tax was to support, $9 million to tourism, #3.8 million to history, and $16 million to the arts.
Wieland said there was $57.2 million used for other, non-tourism programs outside the original funding sources.
Several hours prior to Wieland’s presentation before the league, freeholders unanimously passed a resolution in support of Fiocchi’s bill.
It noted that Bergen County “has the most to gain with A2776 since they get about 7 percent return on investment. The top four generators of occupancy tax represent 41 percent of the total collected and include: Bergen, $11.8 million, Middlesex, $10.45 million, Morris, $8.2 million and Cape May, $8.1 million.
The resolution further states that the bill would “force those dollars generated through tourism to go back to the counties to fund tourism promotion. County government supports the infrastructure that supports tourism. A municipality hosts an event and generates income yet traffic on county roads and bridges are impacted, along with public works, the landfill and at times the county sheriff/ jail and there is no compensation to the county.”
“We cannot county on tourism promotion to be done effectively through the N.J. Division of Travel and Tourism,” the resolution states. “Each county has their own brand and target markets. There is a separation between business and leisure tourism and the funds should be distributed to the counties to market in ways that best suits their needs. Tourism marketing cannot be effective using the “one brush paints all” approach. Increasing the funding to the Division of Travel and Tourism will not trickle down to the county level. These funds will offset existing county tourism promotion expenditures and or allow for an increase in marketing to grow overnight stays and grow the occupancy tax.”
Beneficiaries of the bill’s passage would include Salem, Cumberland and Warren counties that do not generate large sums in occupancy tax. “They will increase their marketing budget and grow tourism through additional advertising,” the resolution states.
“The Wildwoods have a different tourism tax and are not able to take advantage of the municipal add on. No other municipality in Cape May County takes advantages of the added 2 percent. This bill will allow for counties to collect a portion of the funds generated by countywide hotels, motels and bed and breakfasts, and use it for marketing and promotion.
“This would not take from the existing dollars allocated but come from the excess occupancy tax $57.5 million) that goes toward other non-tourism programs,” the resolution concludes.