The Sunshine Economy: Tax Money for Tourism

Mar 6, 2017

A Miami-based rapper. A second-tier English soccer club and a sports car racing team.

 

What ties them together is Visit Florida, the state group that markets Florida to tourists across the country and across the globe. What also ties these three together is they provided the ammunition for opponents of using taxpayer money to promote tourism.

 

There was the $2.9 million paid to International Motor Sports Association to put Visit Florida on the racing cars of a team. There was the $1.25 million spent to emblazon the Fulham Football Club kits with the words "Visit Florida." But the deal that brought Visit Florida’s business practices the most scrutiny was the $1 million deal with Mr. 305, also known as the singer Pitbull.  The deal included social media mentions, concert getaways and the racy music video "Sexy Beaches."

That deal was seized upon this fall by critics of Visit Florida -- namely the Republican Speaker of the Florida House Richard Corcoran -- who used it to criticize the lack of transparency over how the agency spends the million of state dollars given to it. The agency said it couldn’t release details of the Pitbull contract because it was subject to a confidentiality clause, but when Corcoran sued Pitbull’s production company, the rapper tweeted a copy of the deal.

All this was high drama for what had been state spending that largely escaped controversy and has grown substantially under Governor Rick Scott.

But now it’s been threatened by Republican lawmakers in the House who have been encouraged by efforts to label such spending as corporate welfare and attacked for unnecessary when Florida tourism has been setting records.

VISITING FLORIDA

Both Miami-Dade and Broward counties have seen the amount of money collected from hotel bed taxes drop in recent months. While 2016 saw a record number of overnight visitors and record spending by visitors, the year ended with tourist taxes falling from the levels a year earlier. Hotel occupancy has dropped as has the average price per room.

Miami-Dade

Broward County

SURVIVING SESSION

Legislation that would have eliminated both the state economic development group Enterprise Florida and Visit Florida instead separates the two efforts. The Visit Florida bill provides for more oversight and moves the financial threat of less money toward tourism marketing to the state budget.

“In Tallahassee, the threat is never over until the legislature sine die’s,” said Bill Talbert, chairman of Visit Florida, referring to the traditional end of the regular legislative session. Talbert says the agency has undertaken several changes to its practices in response to the criticism over lack of transparency. As of Jan. 11, the organization will no longer enter into confidentiality agreements similar to the one in it’s contract with Pitbull. Visit Florida also has a new CEO, Ken Lawson. Lawson previously led Florida Department of Business and Professional Regulation.

The transparency issue is behind us. - Bill Talbert, Chair, Visit Florida

  Under legislation designed to reign in Visit Florida, the legislature would have to approve any business contract over $750,000. “It’s a long process,” Talbert said. “The transparency issue is behind us.” 

Another criticism of Visit Florida by its opponents is how the tourism industry makes its contributions to the public-private agency. Much of those contributions are in-kind donations. Through the first three months of this of this fiscal year, in-kind contributions to Visit Florida are $28 million compared to $1.1 million in “partner investments.”

“It’s a hard dollar for somebody,” said Talbert, “whether it is a hotel stay or restaurant or ground transportation. That is costing somebody money.”

Florida has seen year over year record tourism for nine years. Visit Florida and it’s supporters don’t take credit for each visitor, but they point to other state’s which have cut their tourism marketing budgets as cautionary tales. In a presentation to the Senate Commerce and Tourism Committee (beginning on page 59 here), Visit Florida CEO Lawson told lawmakers Colorado lost $1.4 billion in tourist spending in one year after cutting the state tourism marketing budget.  “When you reduce the investment (in tourism marketing) and the number of visitors and jobs go down it’s very hard to get them back,” said Talbert.

Tourism dollars (are) not a core function. - Tim Phillips, Pres., Americans for Prosperity

  Focus on Florida

But it’s not economics that opponents argue, at least not directly. It is a philosophical disagreement over the role of state government and the economy. “A core function of a state is education. Transportation, roads, infrastructure; a core function,” said Tim Phillips, president of Americans for Prosperity. “Tourism dollars (are) not a core function.”

Americans for Prosperity has targeted Visit Florida and the state’s economic development agency Enterprise Florida this legislative session. It is just the latest policy and political interest the advocacy group has taken in the Sunshine state. Phillips estimates AFP’s budget for Florida this year is in the single-digit millions of dollars range. The group says it’s largest footprint is in Florida. It’s efforts include targeting the state spending for job incentives and tourism marketing, as well as citizenship training for legal immigrants. 

It’s also looking forward to the next election cycle. “I think Florida governor will be a priority for us,” said Phillips. “We will absolutely look at the Florida (U.S.) Senate race.” Democrat Senator Bill Nelson faces re-election and Governor Scott is widely expected to run as a Republican.