Miami-Dade tourism industry reeling over Legislature’s change to tourist tax structure

·4 min read

The out-sized impact of a major tax break bill on Miami-Dade County has the local hospitality industry fearful that the bill language would fundamentally change the county’s 35-year-old marketing arm and inflict a major hit on the cornerstone of South Florida’s economy.

The bill that includes a $193 million package of tax breaks and a plan to continue the refund of $543 million to the largest corporations in the state moved forward in the Florida House on Friday.

HB 7097 — sponsored by Rep. Brian Avila, R-Hialeah — is wide-ranging, touching sales tax holidays, tax breaks to rental car companies and tax rates on surplus lines insurance premiums.

“Ironically, the largest county with the most global impact on tourism would no longer have a county-wide tourism marketing effort,” said Rolando Aedo, chief operating officer of the Greater Miami Convention & Visitors Bureau (GMCVB).

In Miami-Dade County specifically, the bill restructures the authorized uses of tourism-related taxes by adding parks and trails, and water-quality improvement to the list of projects that could be financed from the tax.

Based on the Miami-Dade County budget, the county collected nearly $47 million in Tourist Development Tax revenues in 2018-19. The estimated collections for 2019-20: nearly $49 million.

The bill essentially redirects the budget for the GMCVB, Aedo said, which serves as the county’s tourism marketing arm. The bill still has to be negotiated in the Senate. While there is not a bill that directly lines up to the House bill, the Senate is also considering several tax break bills this year to which this bill language could be attached.

Cities have control of the money

The GMCVB, which formed in 1985, receives about $17 million of the county’s tourism development tax annually, plus $8 million in food and beverage tax. Under the bill, both chunks of money would be diverted away from the organization and toward the cities where the taxes are generated. Cities like Miami, Miami Beach and Sunny Isles Beach would have larger pots of money to work with, as opposed to El Portal, for example.

From there, the cities could use the funds for parks, trails and most notably, water-quality improvements.

It would be up to each municipality and the county to decide where the money would go, but it also allows them to give some of their money back to the visitors bureau.

House Speaker Rep. José Oliva, R-Miami Lakes, said he commends Avila’s bill for allowing local governments to make those decisions.

“Bringing people to South Florida is important. Keeping them there and having them return is also important,” he said. “If they think running an ad is more important to keeping tourists happy than fixing the water supply, they can make that an option.”

But Aedo said a diversion of tourism funds would put the operation out of business.

“All of that, $26 million ... that is 80% of our budget,” Aedo said.

Marketing concerns

Wendy Kallergis, president and CEO of the Greater Miami and the Beaches Hotel Association, said without marketing efforts of the county-wide bureau, the industry will suffer. She said this bill combined with the coronavirus outbreak’s negative impact on tourism is “just not fair.”

Hotels are often not able to do all the marketing they need to draw business, she said, and hoteliers deserve to benefit from the tax dollars their customers pay.

“It’s not [the state’s] money to play with,” she said. “It’s our money.”

The longtime operator of Coral Gables’ famous Biltmore Hotel, Gene Prescott, said he expected his overhead to go up if this bill were to pass. Coronavirus has already dealt a blow to his business, he said, and the industry is depending on marketing now more than ever.

“We’re going to have more need when we come out of this virus scare,” he said.

Prescott added that the industry essentially taxes itself to pay into the bureau’s efforts, which he said he believes is “proper and correct.”

“This is a dedicated source of funds that are being targeted,” he said.

The Florida Chamber of Commerce and Florida TaxWatch have come out in opposition to the legislation.

The chamber wrote a letter to lawmakers last week in support of the bill’s policy but notes that the tourist development tax “should only be used on projects that have a direct connection to tourism or tourism marketing.”

In a recent briefing, TaxWatch warned that the potential loss of state tourism funding further makes 2020 a risky year to divert local promotion dollars.