Republican Sen. Manny Diaz is hoping to give the green light to local governments to increase their tourist development tax rates and spend that money more freely.
Those taxes are typically set at 1% or 2% of the rate charged for lease and rental properties. Local governments are also able to add an additional 1% to the tax rate via supermajority vote. The Diaz measure (SB 2008) would remove that supermajority requirement, instead requiring a majority-approved ordinance and a sign-off from local residents via referendum.
In addition, current law only allows that 1% boost to be imposed if the county has set up a basic 1%-2% tourist development tax for at least three years. The Diaz bill would also remove that three-year lead-in time, meaning municipalities could go over that 2% cap immediately.
The COVID-19 pandemic dealt a huge blow to those locally imposed taxes. Orange County’s tourist tax dropped by 97% year-over-year from April 2019 to April 2020. Those struggles continued into the pandemic. As of late last year, revenues were still 60% below normal. Other localities, such as Sumter County, decided to eliminate the tourist tax altogether as a way of encouraging out-of-state residents to visit.
The new proposal would allow local governments to more easily make up for lost dollars, though it would be difficult to make up those gaps entirely.
Diaz would also expand the ways local government could use revenue collected through that tax. For instance, for a local government entity to use that money for debt service or refinancing of certain facilities, the municipality must approve a waiver by a supermajority vote. The Diaz legislation would permit that move if approved by a voter referendum.
The money could also be used for flood mitigation projects or improvements if the Diaz measure passes. Those projects aren’t currently listed as a proper use of the tourist tax revenue.
The legislation would put a five-year expiration date on taxes approved via referendum, though voters could approve a new five-year extension with a subsequent referendum.