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Commissioners balk at bed tax referendum proposal

Jun 5th, 2014 | 0

By DOTTY NIST
Walton County’s bed tax rate will soon be declining, at least for a time, as scheduled, in the wake of a recent county commission decision.
The decision took place at the May 27 Walton County Board of County Commissioners (BCC) regular meeting at the Walton County Courthouse.
In May 2009, the BCC had voted to increase the bed tax collected on rental of short-term accommodations south of the bay from four cents per dollar to four and one-half cents. At the time, the imminent opening of the new Panama City/Bay County International Airport was being eagerly awaited by the tourism industry. The half-cent increase was to be used as a funding means to promote Walton County’s beaches to areas outside the current market, composed predominantly of visitors travelling to the area by automobile, and to cooperatively market new low-cost air service.
The bed tax hike had been controversial, with the Walton County Taxpayers Association (WCTA) among the parties opposing the move. WCTA opposition had been withdrawn on the conditions of an Oct. 1 effective date, a sunset on the increase after a five-year period, and arrangements to escrow the new revenue for the specific purpose. The increase had been approved after lengthy public input.
Funds from the half-cent were utilized by low-cost air carrier Southwest Airlines, which began providing service at the airport, now known as the Northwest Florida Beaches International Airport, soon after the opening of the facility in May 2010. Southwest had used funds from the half-cent for advertising and promotion of the area in markets served by the airline’s flights to the destination.
Later, after Southwest cut some of the flights specified in the airline’s agreement with the county and Walton County Tourist Development Council (TDC), funds from the half-cent going to the airline were reduced, with a portion being transferred to the TDC for promotion of the area in emerging markets. Currently, as a result of Southwest having discontinued its promotional campaign, all funds from the half-cent are being utilized by the TDC for emerging markets campaigns.
With the half-cent scheduled to sunset at the end of September 2014, a proposal for a voter referendum was brought before the BCC at the May 27 meeting.
On behalf of the TDC, Executive Director Jim Bagby presented a proposal for an August 2014 nonbinding referendum in which voters in the TDC’s taxing district would be asked whether they supported establishment of a bed tax in the same amount to replace the sunsetting half-cent, with the resulting funds to go to another purpose. The proposed purpose was funding of destination improvement programs and projects.
Bagby explained that demands for use of TDC funds had recently increased for projects such as bike path construction and maintenance, construction of parking, and acquisition of property for parking and beach accesses.
District 4 Commissioner Sara Comander asked for a list of projects to be funded and information on the amount of money collected through the half-cent. She also wondered whether, if implemented, a new half-cent tax would be set up to sunset or go on “ad infinitum.” “I have more questions than I have answers,” Comander said.
District 5 Commissioner Cindy Meadows was open to the idea of a referendum, commenting that she thought everyone agreed that, in picking up some recent projects, the TDC was now absorbing some costs and taking a burden off the county. It would be important, she noted, to specify what projects could be funded through the half-cent.
Bagby said the reason the referendum was being proposed in conjunction with the primary election was to allow for the new tax to be implemented at the same time as the sunsetting of the old one, providing for bed taxes to be collected in a “seamless” manner without going down and then back up.
In the recent survey of residents conducted by the TDC, he continued, 61 percent had said that they would support continuing to collect the half-cent for capital improvement and maintenance projects.
The idea of a referendum triggered as many different opinions as that of continuing the half-cent. County Commission Chairman Bill Chapman spoke in opposition to the referendum, recalling that in years past the BCC had at least once gone against the will of the voters as expressed in a nonbinding referendum.
Responding to some of Comander’s questions, Bagby noted that the half-cent now generates more than $2 million per year. He said the TDC has a list of projects that could be funded. In addition to those discussed, he mentioned beach access, dune walkover, and entryway improvements. Bagby noted that the contract for maintenance of the bike paths that the TDC is now funding will be ongoing and will likely increase in cost in the future. He also spoke of the interpretive signage project that the TDC has initiated for the coastal dune lakes.
“This is you all’s decision,” Bagby told the commissioners, “we support whatever decision you make.” He reminded them that any money spent by the TDC on the bike path and similar projects is money the county will not have to raise, possibly by raising property taxes.
Comander said she would still like to have an estimate of costs for ongoing and proposed projects and information on the funds the TDC has in reserve.
Bagby responded that the TDC was working on a plan for its reserves, but that most of those funds would be going to the upcoming countywide beach nourishment project.
District 2 Commissioner Kenneth Pridgen commented that he was surprised that there had been so little contact by the public and bed tax collectors to commissioners prior to a decision on the half-cent cent coming up on the BCC agenda.
Meadows observed that, now that there had been agreement on the part of the state attorney general that the cost of a number of “much needed improvements” south of the bay could be funded through TDC bed taxes, if the TDC does not pay, the county “will be presented with a huge bill.” She explained that, due to many needs and pressures, the area is now “at a tipping point.”
She observed that, like the county budget, the TDC budget is already largely allocated. “There’s not a whole lot of give there,” Meadows said.
South Walton County community leader Bonnie McQuiston was the first speaker during the public comment period that followed.
“This is a perfect example of why people don’t trust their government,” she said. She recalled the sunset clause having been the most important factor in the decision to institute the half-cent in 2009. McQuiston said she did not recall the public having voted in connection with the imposition of that or any bed tax increase, and she did not favor such a vote. If the TDC cannot manage their expenses on funds they are getting, they should come to the BCC and ask for an increase, McQuiston asserted.
WCTA President Don Riley stated the position of his organization as “emphatically no” on the question of the half-cent.
Riley agreed with Chapman regarding the referendum, saying that, if one were held, “it ought to be binding.” To use any such vote as justification to extend the half-cent “is not good accountable government,” Riley continued. “The decision is yours,” he told the commissioners.
However, Riley stated his support for Bagby as TDC director, observing that, with this proposal, Bagby was “just the messenger.”
District 3 Commissioner Bill Imfeld asked whether a referendum would not be required if funds were to be used “to fund debt,” as with acquisition of property. Walton County Attorney Mark Davis responded that there would be such a requirement in the instance of bonding.
South Walton County resident Mary Nielson said she would like to see a breakdown of the use of the other portions of the TDC budget, whether there are unrestricted reserved funds, and whether it would be possible to undo the allocation of existing TDC “cents” and use those funds for some of the purposes outlined.
“I think you all are way ahead of the ball game,” Suzanne Harris of Edgewater Beach Condominium complained regarding the proposal. Harris asserted that most bed tax collectors were “very opposed” to continuing the half-cent.
She recalled that the BCC had promised that the half-cent “would not be extended in any way.”
Bagby said what he had been hearing from bed tax collectors was frustration that the funds they were collecting were being used for destination improvements, bike paths and dune lake signage rather than marketing for their accommodations. Tourism council members had been of the opinion that “fencing off” funds spent for these improvements to the half-cent would cut down this frustration.
He offered to provide each commission with detailed information on the bed tax and how each cent is allocated.
With public comment concluded, Comander observed that Harris had been correct that the BCC had promised that the half-cent would sunset in five years. She and Pridgen had been on the BCC when the half-cent was approved in 2009, although the other current commissioners had not.
“We do need to let this sunset,” Comander continued.
She called for taking some time, once that had occurred, to gather information and input on the possibility of instituting the half-cent for the stated purpose, “even if it takes a year.” She did not see a problem, bookkeeping or otherwise, with the bed tax going down and then possibly being increased again.
Pridgen expressed agreement with that plan of action.
Comander moved to let the half-cent sunset and address the issue at a later date.
Meadows suggested rewording of the motion, observing that the half-cent would sunset automatically.
At the recommendation of Davis, Comander amended the motion to say that no action would be taken by BCC upon the sunset of the current tax.
The motion was approved unanimously.

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