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Tourism industry subsidies, a thread:
We have a story today looking at an obscure tax district that's designed to wall off millions in property taxes paid by Universal & SeaWorld, hoteliers, and other businesses in the International Drive corridor and force the county to spend those tax dollars in that same area.
This tax district – the “International Drive Community Redevelopment Area” – is just one of many ways taxpayers structurally support the tourism industry.
For instance, the city of Orlando has set up a similar tax district for Universal Orlando’s main campus, which siphons even more of the property taxes that Universal pays out of the city and county general funds.
The city, county and Universal used that tax district to finance a ~$50 million highway interchange meant to handle the extra traffic when Universal opened its second theme park (Islands of Adventure) and CityWalk in the late 90s.
Then, in 2013, they used it to pay $9 million more in upgrades around Universal's campus, including a pedestrian bridge linking Universal’s Cabana Bay hotel to its theme parks: https://www.orlandosentinel.com/news/os-xpm-2013-04-09-os-orange-vote-universal-20130409-story.html
(By the way, that tax district is supposed to expire in a few years, too – if the city and county don’t vote to extend it.)
Of course, Walt Disney World has an entire government to itself: The Reedy Creek Improvement District.
Some of the financial benefit of that includes the ability to sell tax-free bonds (federal taxpayers subsidize your debt) and to avoid sales taxes on purchases...like, say, when you’re building $85 million parking garages for Disney Springs: https://www.orlandosentinel.com/os-xpm-2013-03-19-os-disney-springs-parking-garages-20130318-story.html
Then there are hotel taxes, which – thanks to state laws that the tourism industry lobbies hard to keep in place – generally have to be spent in ways that prop up tourism, like tourism advertising and convention centers.
Nobody knows more about this than @Scott_Maxwell.
Nobody knows more about this than @Scott_Maxwell.
It's worth noting, though, that the hotel tax law does allow *some* flexibility in how counties can spend it – but, especially in tourism-dominated Orange County, local officials aren’t always interested in that flexibility.
Two examples: Last year, Orange County refused to consider using hotel taxes (instead of primarily property taxes) to pay for Universal’s new road, even though there seemed to be a clear legal argument that they could have: https://www.orlandosentinel.com/politics/os-ne-universal-orange-county-road-20191003-pvjqjtkjlrcxdebyrw63qdabcm-story.html
And earlier this year, when Florida House Republicans proposed letting counties spend some of their hotel taxes cleaning up rivers and springs and preparing for sea-level rise, Orlando Mayor Buddy Dyer and Orange County Mayor Jerry Demings refused to take a position on the issue:
Beyond big structural subsidies like these, there are scores of other tax breaks and incentive programs and budget earmarks that benefit the tourism industry.
A few examples off the top of my head:
A few examples off the top of my head:
The most infamous is the state’s “Urban High Crime Area Jobs” program, which is supposed to help impoverished communities but has become a recurring subsidy for Universal (which has claimed $17 million of the $34 million in tax credits ever awarded): https://www.orlandosentinel.com/news/os-ne-universal-studios-high-crime-tax-breaks-20200918-dbcjby2cpjdara6jednjnywpga-story.html
There’s also a decades-old tax break that allows Disney and Universal to sell park tickets, hotel rooms and food to themselves before they sell them to tourists, which lets them deflate the sales tax: https://www.orlandosentinel.com/os-xpm-2011-05-25-os-disney-vacation-package-taxes-20110525-story.html
Fun fact about that one: It created a situation where Disney was having to pay sales tax on some tickets that it ended up selling or donating to charities or other tax-exempt groups (because Disney had already paid the sales tax on the internal wholesale sale).
What’d we do about that? We created a second tax break just a few years ago that allows Disney to go back and get a refund on those sales taxes.
Another one: The tens of millions of dollars state taxpayers spend every year on tourism marketing through Visit Florida
Another one: Around 1997, we stopped requiring hotels to pay sales tax when they buy food that they then use as a “complimentary” perk for guests. (Sidenote: "Free Dining" was one of Disney World's most successful annual hotel promotions back when I covered the company.)
Then there's all the money taxpayers spend on events that are meant to draw visitors. Example: this year’s state budget includes $500,000 for the 2022 Special Olympics USA Games, which will be held mostly at Disney World and broadcast on Disney’s ABC and ESPN networks
Gov. Ron DeSantis vetoed more than $1 billion from the budget this year but he didn’t touch that: https://www.orlandosentinel.com/politics/os-ne-desantis-budget-vetoes-20200629-gz3qge6rczerzpcgmukb3esquu-story.html
I could go on (and I’m going to kick myself later when I remember other examples).
But the point is, regardless of whether you think these subsidies are smart public policy or not, we should all be aware of them.
Oh, and read today's story! https://www.orlandosentinel.com/news/os-prem-ne-orange-county-international-drive-tax-district-20201209-25uvrf23fvau5dcchzqj75l6wm-story.html
But the point is, regardless of whether you think these subsidies are smart public policy or not, we should all be aware of them.
Oh, and read today's story! https://www.orlandosentinel.com/news/os-prem-ne-orange-county-international-drive-tax-district-20201209-25uvrf23fvau5dcchzqj75l6wm-story.html
