SAN JUAN COUNTY HOTEL/MOTEL TAX

Tax idea generates discord

posted 12/19/01
If you were looking for consensus yesterday's (Dec. 18, 2001) worksession was not the place to be. Three business groups had asked the commissioners to impose another 2 percent hotel/motel tax and use the money solely for promotion of tourism. Other people had other ideas.

Becky Smith, manager of the county's Visitor and Information Service, opposed the tax. She said residents think the islands are somewhat overrun. " VIS has never been a salesperson," she said. "Our job is educating people about what is here."

Dona Wuthnow, San Juan County Parks Superintendent, suggested three-eighths of the new 2 percent tax be given to the parks department. She estimated that would equal $120,000.

Commissioner Darcie Nielsen favored the new tax but did not favor using it solely for promotion of tourism. She preferred setting some of the second 2 percent aside for parks with the remainder split between VIS and tourism promotion. The original 2 percent would be used for the fair, museums and theaters. The Economic Development Council, as a neutral agency, could oversee the promotion part she said.

Commissioner Rhea Miller questioned whether county residents wanted to spend more than $1 million over the next three years ($350,000 per year) on tourism promotion. Noting the number of B&Bs has increased to a record high in the county she said. "There are many more slices of the pie. How may slices of the pie can San Juan County support?" She preferred to wait until after the holidays to discuss the issue and wanted community involvement.

Commissioner John Evans felt asking the community for its input was not appropriate. "This is not the public's money," he said. "The lodging industry is asking us to raise their prices 2 percent." The hotel/motel tax is paid by customers of lodging facilities. Under state law the money can be used only for tourism promotion and construction or maintenance of tourism-related facilities.

Michael Rubin, Orcas Island Chamber of Commerce president, explained the need for the tax. "We're trying to be proactive." he said. By not having a promotion campaign "we're not a player in a very competitive market," he said.

Adam Farish of Outlook Inn opposed the tax. He noted most of his business comes from Western Washington which has the highest unemployment rate in the nation. Adding an additional tax would be a deterrent to tourists he said.

Some of the people in attendance were upset by a letter the VIS had sent to the BOCC earlier this month. In the letter VIS Manager Becky Smith and VIS President Susan Fletcher proposed not allowing hotel/motel tax money to be used for museums, theaters or parks. Lopez Museum Director Nancy McCoy said heritage museums are a high priority for tourists. She supported the idea of community discussions and Nielsen's idea of funding for parks.

Fletcher apologized for the letter. "There is no intention of taking money from museums. We do feel an additional tax at this time is foolhardy," she said.

Another worksession will be held at 2:30 p.m. on Feb. 5, 2002.

State tourism budget could use more ammo

posted 12/13/01
"The geographic lottery wasn't fair, Washington state got it all" -- that's the theme of the next campaign to increase tourism. State officials told attendees at a Friday Harbor luncheon yesterday (Dec. 13, 2001) Washington's tourism budget lags behind other states. It ranks 44th in the nation. Orcas Island B&B owner, Mike Stolmeier said, "You're our special forces and we're not giving you enough ammunition."

Restaurant owner Roger Bennett suggested the state impose a tax on the restaurant trade as a way to raise funds. Referring to the hotel/motel tax, he said, "It's not fair that the lodging industry bears the burden."

Guest speaker Washington State Tourism and Business Development Director Peter McMillan said nationwide the state average for tourism promotion is $7 million. Washington budgets $3.8 million annually. The return on investment (ROI) is 3:1 in state and local tax revenue he said.

Three dozen county business owners/operators attended the meeting hosted by the Island Economic Development Council, Business Association of San Juan County, and the San Juan and Orcas Island Chambers of Commerce. John Dunning, owner of Windermere San Juan Islands, suggested the ROI should be the focus when talking with legislators. "It's worthwhile to make the investment," he said.

McMillan encouraged people to attend Tourism Day in Olympia on Jan. 29, 2002.

McMillan spent the morning talking with members of the chambers and the business association. He was impressed with their strategies. They have asked the county to increase the local hotel/motel tax to 4 percent with the money earmarked solely for tourism promotion. The Board of County Commissioners is considering the idea.

San Juan Safaris owner Bill Wright suggested the local tourism industry needs to be more realistic about attracting tourists in the winter. As the rain drummed on the roof of the restaurant, he said this time of year is more aptly titled the " hopeless" season rather than the shoulder season. He thought it would be more productive to focus on spring as the shoulder season.

B&B owner Helen King disagreed, citing Oregon's promotion of stormy days on the Oregon coast.

More money for tourism promotion requested

By Sharon Kivisto

posted 12/11/01
More money should be allocated for promotion of tourism in the San Juan Islands according to county business leaders. Three business groups have passed a resolution asking the BOCC to double the hotel/motel tax (from 2% to 4%) and use the additional funds solely for promotion of tourism. Visitor Information Service personnel want the BOCC to use more of the present tax for that purpose.

The county collects approximately $350,000 annually in hotel/motel tax. The funds are distributed to performing arts facilities, the county fair, the VIS, special projects and into a reserve fund.

Twenty-two percent is divided equally among Orcas Center, Lopez Community Arts Center and San Juan Community Theatre. Lopez, Orcas and San Juan Island historical museums divide up 18 percent. Thirty percent goes to the county fair/multi-purpose facilities. Twenty percent is allocated for the VIS. Five percent goes into a special projects fund and five percent goes into a reserve fund.

In a letter dated Nov. 7, 2001, VIS manager Becky Smith and VIS Board President Susan Fletcher asked the BOCC to reconsider the allocations. They believe the money should be used for promotion of tourism. They suggest the commissioners wean the musuems, fair and theatres off of the funding source over a five-year period.

Increasing the hotel/motel tax another 2 percent was discussed at a Nov. 7, 2001 meeting in Rosario Resort sponsored by the Business Association of San Juan County (BASJC). Owners and operators of B&Bs, whale watch charters, gift shops, airlines were among the attendees. County Commissioner John Evans and Town Councilmember Bill LaPorte also attended.

At the meeting, Smith said, "I can tell you the museums and parks will be there in force and will stand up and say give nothing for VIS, nothing for tourism. If they hear another 2 percent is being collected, they'll be there."

Commissioner John Evans favored an increase of 2 percent. "Two percent more on someone's bill won't make a difference if someone stays or not," he said. He believes using the revenue for promotion of tourism would make a difference to county businesses.

County allocation of Hotel/motel tax revenue

San Juan County Commissioners allocate the hotel/motel money using a formula which was last updated in Dec. 1999. The tax revenue generated from the 2 percent tax on lodging facilities is distributed as follows:

• 40 % -- Performing and Visual Arts
  
  
• 30 % -- County Fair/Multi-purpose Facilities
  
  
• 20 % -- Visitor Information Services
  
  
• 5 % -- Special Projects Fund
  
  
• 5 % -- Reserve Funds

B& operator Mike Stolmeier told the group he is putting together a panel to review the options available to increase tourism. "We've got a high quality product -- a night in the San Juans," he said. "We don't need to construct anything. I'd much rather pay wages and benefits than unemployment."

The BASJC along with the Orcas Island and San Juan Island Chambers of Commerce passed a resolution asking:

THEREFORE, BE IT RESOLVED, that the Boards of Directors of the Business Association of San Juan County, San Juan Island Chamber of Commerce and Orcas Island Chamber of Commerce, hereby, request the Board of Commissioners of San Juan County to enact legislation allowing the lodging industry to collect the tax as provided in RCW 67.28.1815 and BE IT FURTHER RESOLVED, that a new loding tax advisory committee be established in accordance with RCW 67.28.1817, comprised of two major collectors of the tax, two organizations involved, presently, in marketing and promoting the San Juan Islands, and one elected official who shall serve as chairman.

The BOCC has not yet acted on the requests.

Letter from VIS manager and board president

Dated: 11/07/01

In a recent meeting, the Board of Commissioners asked the Visitor Information Service and other representatives of the hospitality industry in San Juan County for suggestions on how to strengthen the industry and thereby bolster lagging county revenues. The "workshop" design did not seem conducive to successful accomplishment of this goal, and indeed few concrete suggestions crossed the bar from the citizenry to the Board. We hope in this letter to set forth more clearly the position of the VIS and the feelings of the innkeepers with whom we have spoken.

In its original charter provided by (by the Board of County Commissioners?), the VIS was established

"to provide accurate, honest, updated, trip planning information for inquiring visitors who inquire both by phone and by mail about the San Juan Islands. The Service shall not be a promotion outlet for the islands or individuals..."

We believe that the time has come to abandon this policy as counter to the best interests of this county's economy and the legislative intent of the statute establishing the 2 percent hotel/motel tax. As we understand the present law, the revenue from the lodging tax or hotel/motel tax must be placed in a special fund and used solely for tourism promotion, the acquisition of tourism-related facilities, or the operation of tourism-related facilities. (See RCW.67.28.1815).

While other counties and municipalities are using these funds to promote tourism in their areas, San Juan County appears to have steadfastly declined to do so. Such a policy may have been acceptable when tourism was doing well, but seems untenable in the present economic times. We believe that this county has funds specifically intended to promote tourism, yet declines to use those funds to promote an industry which is a principal employer in the county and a major source of sales tax revenue. We urge the County to change the charter of the VIS and instruct it to expend the funds available in "tourism promotion" as defined in RCW.67.28.080.

The Visitior Information Service and the county's lodging industry as a whole recognizes that other facilities and agencies have become accustomed to receiving the majority of the 2 percent hotel/motel tax revenues. It would invite public displeasure to suddenly cut off funding to these agencies, even though they may be only tangentially related to tourism. We suggest, instead, that this County institute a five-year plan to wean these agencies off hotel/motel funding and gradually redirect these revenues to the purpose for which the legislature intended them.

In summary, then, the Board of Directors of the San Juan Islands Visitor Information Service urges the Commissioners to take two major actions:

1. Direct the VIS to use the funds available for "tourism promotion" as defined by RCW.67.28.080. and
   
   
2. Beginning in the next fiscal year, and continuing over the following four years, gradually decrease hotel/motel tax funding to agencies now supported by hotel/motel tax revenues, but which do little to accommodate activities for tourists or tourism. The hotel/motel funds thus released could be used to further support the VIS and other qualified tourism promotion agencies or facilities, under the guidance of a duly constituted Lodging Tax Advisory Committee.

We believe these actions will promote an industry vital to the economic interests of the citizens and government of San Juan County, and thereby increase sales tax revenues for the general purposes of the county.

SAN JUAN ISLANDER © 2008

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