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Editorial: Pinellas should be flexible with resort tax

 
Published July 31, 2015

With Pinellas tourism hitting record levels, it's a good time for the county to raise the resort tax by an additional 1 percent. But when the County Commission takes up the issue Tuesday, it should be careful about dictating how the resort tax money should be spent. The emphasis should be on remaining flexible rather than on locking in specific allocations of the revenue for tourism advertising and construction projects.

As a high-tourism county, Pinellas has the authority to raise the resort tax on hotel rooms and other rentals from the current 5 percent to 6 percent. The additional 1 percent is expected to generate at least another $7 million a year, bringing total resort tax revenues to $42 million. The controversy remains not about raising the tax but how to divide up the money, particularly when there is a lack of clarity about potential construction projects.

As the debate has dragged on, the line for resort tax money for construction has gotten a bit shorter. An Olympic-style BMX track in Oldsmar received state money, expects to open in the fall and is off the list. So is the Clearwater Marine Aquarium's plan for a new home downtown, which proved to be too ambitious. But there still are likely to be significant demands on the resort tax for construction projects, including a new spring training home for the Toronto Blue Jays in Dunedin and a soccer stadium for the Tampa Bay Rowdies in St. Petersburg. And then there is the Tampa Bay Rays stadium stalemate.

The bonds that helped pay for Tropicana Field will be paid off this year, freeing up 1 cent of the existing 5 cent resort tax and at least another $7 million a year. The Rays need a new stadium and want to search for sites in both Pinellas and Hillsborough counties, but the St. Petersburg City Council is deadlocked over allowing the team to look. A new stadium likely would cost roughly $500 million, and even with a substantial contribution from the Rays it probably would take more than 1 penny of the resort tax to make the numbers work.

That puts county commissioners in an awkward position as they consider raising the resort tax and allocating all of the money without knowing how much will be needed for the Rays and by other construction projects. Yet the Tourist Development Council, which is dominated by hotel interests, still recommends that the commission lock in 60 percent of the entire resort tax for advertising and promotion.

Just because advertising and promotion get about that portion of the resort tax now does not mean that is the right approach as the Rays bonds are paid off, an additional penny is added and a lot more money becomes available. The resort tax revenue since October is nearly 13 percent higher than this time last year, a rate that could generate an additional $4.5 million by October. It would be shortsighted to lock in a significant guaranteed increase in advertising spending when so much is uncertain about the Rays stadium and other capital projects.

It could be argued that increasing the resort tax now is premature without firmer estimates on specific project costs. But it is reasonable to raise the tax starting in January and start saving the money from the additional penny, because overall demand will exceed revenue. It would be unreasonable to reserve 60 percent for advertising and promotion now. At the very least, the commission should maintain maximum flexibility for spending the additional penny until the Rays stadium stalemate is resolved.