Local Tourism Agencies Aren’t Liking the Extra Sunshine

Commentary

Local Tourism Agencies Aren’t Liking the Extra Sunshine

A 2017 change to Florida tourism law requires local tourism agencies and partners of the state agency Visit Florida to publicly disclose salary and other financial earnings information.  As a result, local marketing agencies around the state are breaking their partnerships with Visit Florida, raising further questions about efficacy and ethics of Visit Florida and its affiliates.

In 2000, the state government explicitly authorized the “Tourist Development Tax” which gives local authorities the option to charge between 3-6% in addition to sales tax on most short term rentals of less than 6 months, and use those revenues for financing sports stadiums, conventions centers, concerts, events, and other activities and infrastructure the government decides promotes tourism.

One section of the “tourist development tax” law (Ch. 125.0104 (5) 4) authorizes  the use of revenue for “administrative costs for services performed by the county on behalf of the promotion agency.”   This clause has been generously interpreted by local tourism officials to pay themselves salaries and bonuses, as well as make financial incentive payments to musical artists like Pitbull and Garth Brooks to perform around the state. Local agencies also fund sports stadiums, conventions centers, and buy marketing related services in a co-op fashion from Visit Florida, where the state uses general funds money to provide a dollar for dollar match..

The revenue for the local organizations is in part collected through taxes (it’s a marketing co-op, so any business that wants to can put money in), yet the organizations that spend the money are technically not government agencies, but the employees and board members are technically public officials.  All public salaries, and any meeting between two public officials, are required by law to be disclosed to the public.   Yet, no detailed reports on those expenses can be found, and it appears no one really knows where exactly the money has gone.

Enter House Speaker Richard Corcoran.  He sued Visit Florida for violating sunshine laws in the case of the Pitbull contract and pushed for the financial disclosure reforms of the tourism agencies because of this concern. The main concern is that board members of Visit Florida and its local affiliates, of whom nearly all own or operate businesses related to the tourism industry, are using public money to line their own pockets with salaries, benefits, travel, entertainment, offset marketing costs, and other perks to their businesses.

Those individuals defend their expenditures and say the process is vital the economy.

Despite state evaluations which show a positive return on investment for the program, myself and others have written about why they are not reliable in the context of real world economic growth.  Governor Scott has even suggested that the overall tourism numbers track directly with Visit Florida spending, an elementary correlation and causation error (smacks forehead insanely hard).  There is yet to be a study which causally links Visit Florida to economic growth.

The point is that no one is exactly sure what these tourism agencies are spending their money on, how much the people running them are getting paid, and what impact it’s all having on the economy.  That’s a problem when you consider that these organizations have been granted taxing power on the very businesses that primarily serve tourists!

At best, perhaps these organizations bring some tourists to Florida that would never have otherwise have come, probably at a net loss to the taxpayer.  At worst, they are taxing productive money out of the economy money and turning it into economically inefficient, crony, public money.  Unfortunately, the questions about return on investment models, issues like the Pitbull situation, and the recent exodus of tourism agencies who would rather lose their financial perks than disclose their expenditures, all make the latter seem more likely.

This is not to say that every agency is corrupt, or that 100% of every dollar spent was wasted, but it speaks to a more general truth that without accountability it is easy for money to be diverted to special interests and questionable expenditures.

Policymakers should view this as a chance re-think the true purpose of, and the true economic impact of the tourist development tax and its programs.

Spence Purnell is a policy analyst at the Reason Foundation, where he works on pension reform, Florida policy issues and economic development.