Council backs effort to retain lodging taxes
The town councilors unanimously approved a resolution asking lawmakers to transfer hotel revenue from the State House back to Newport and Bristol counties.
“We’d like to keep the tourism dollars local,” President Kristine Trocki said.
The issue surfaced at the council’s March 6 meeting with a request from Evan Smith, president of Discover Newport. According to Smith, a law enacted in July 2015 cut Discover Newport’s 47 percent share of the lodging tax by 5 percentage points. Instead of directly benefiting tourism in lower Narragansett Bay, that money is now being funneled into the Rhode Island Commerce Corporation, helping to hike the state’s portion to 28 percent. The state was receiving 21 percent of the lodging tax, but the new structure allocates an additional 5 percentage points from tourism bureaus and 2 more percentage points from the Rhode Island Convention Center’s share.
The Newport office is one of four regional tourism bureaus in the state, along with Blackstone Valley, South County and Providence Warwick.
Although the law has been on the books for two tourist seasons, Discover Newport still hasn’t felt the impact. According to Paul Grimaldi at the Department of Revenue, typical collection laws include delays to give businesses time to adjust their budgets and bookkeeping.
“There was some discussion that changing allocations at the height of the tourism season would have caused problems for some organizations,” he said.
To rectify those concerns, the restructuring was postponed until the new year. In 2016, the state finally began collecting its additional 5 percent, but it was ultimately reimbursed to the four bureaus through legislation spearheaded by Newport Rep. Lauren Carson. A major influence for the measure was that spring’s botched statewide “Cooler & Warmer” marketing campaign, which included footage of Iceland in a commercial publicizing the Ocean State.
Carson’s bill, however, ends June 30. If Gov. Gina Raimondo’s budget doesn’t reapply the 47 percent allocation to Discover Newport, that 5 percent again will flow toward the state.
Smith backs Raimondo’s commitment to marketing Rhode Island, he said, but taking revenue from the four regional tourism bureaus is not the solution.
“The state has ample money to support a robust tourism office,” he said. “We fully support that the state will invest in travel and tourism, which is a major driver to our economy. However, they do not need to reduce our funding to accomplish this.”
Discover Newport, which is the official tourism office for the nine towns in Newport and Bristol counties, has an annual budget of $3.5 million. Nearly 85 percent of that comes from the lodging tax, Smith said, and the reduction represents about a $300,000 loss for the agency.
If the legislature doesn’t take action to curb the sunset clause, the distribution for the upcoming summer will be 42 percent for tourism bureaus, 28 percent for the state and 5 percent to the Providence-Warwick bureau for the Rhode Island Convention Center, down from 7 percent. Jamestown, in both scenarios, will continue to collect 25 percent of the taxes from lodging in rooms located in town.
According to Smith, Discover Newport’s $3.5 million in spending helps boost hundreds of millions of dollars from lodging, dining, recreation and transportation in the two counties.
Jamestown Rep. Deb Ruggiero didn’t say whether she would vote to reinstate the 47 percent rate, but did stress the importance of tourism in her district.
“I will always be a strong advocate for tourism, especially for Newport County because it’s a $750 million industry crucial to our local economy, creating thousands of jobs,” she said. “We need to promote our history, culture and world-class beaches.”
Senate President Teresa Paiva Weed could not be reached for comment.