Opinion

Letter to the editor against county taking Occupancy Tax dollars

March 12 meeting 003A giant step back for Ocracoke

By Al Scarborough

Evidently a proposal to provide Ocracoke with an additional $200,000+ in occupancy tax funding has resulted in a decision to reduce Ocracoke’s funding by $100,000 annually and give that amount to Hyde County.

It should be noted that Hyde County already gets almost $50,000/year (10 percent of occupancy revenue). What is done with that money? Under the best case, it is suggested that by giving control of $100,000 to the county it is projected that we may increase the occupancy tax revenue by $100,000. This is hardly a move forward. Anyone who believes that spending $100,000 to make $100,000 is a winning strategy needs to take a basic course in business.

(Hyde County Manager) Bill Rich stated that we could “take $100,000 (from Occupancy tax revenue) without hurting anybody.”

The real question should be, does it help Ocracoke. While it may be legal to divert $100,000 annually from the Ocracoke occupancy tax board to the Hyde County government, it is definitely not in the spirit of the legislation that specified that 90 percent of the funds be for the benefit of Ocracoke. The legislation did not suggest that the occupancy tax was to benefit businesses on Ocracoke.

Mr. Rich states that he hopes to increase the shoulder season occupancy taxes by $100,000. I can understand why the lodging group favors this approach. If by chance this approach does increase occupancy tax revenue by 20 percent, (even Bob Oakes who evidently helped to write this approach recognizes that it is unlikely to achieve that objective) it would mean that the lodging industry would have increased their income by $3,500,000 annually. (Yes, you read that correctly, to get $100,000 in occupancy tax there must be three and one half million dollars in additional revenue to the lodging group.)

Spending $100,000 of public money to increase occupancy rates at private business seems like a real good deal for motels and cottages. If this 20 percent increase materializes, Ocracoke would be back to where we were if no changes were made. This is not progress. The county’s stated goal of an additional $3 million  in revenue must be a misstatement.

Current county sales tax and lodging taxes revenues are less than $3 million. To raise $3 million in sales and occupancy taxes would require at least an additional $100,000,000 (one hundred million dollars) in sales taxes and lodging rentals. It is not possible to achieve that goal.

Let’s forget the additional 2 percent tax.  What could we get for the $100,000 that will now go to the county? Will we have public restroom facilities? Will we have adequate day care for the lodging industry’s employees, or will the citizens of Ocracoke be asked to buy T-shirts and donuts to keep this vital program alive? Will the fire department, the youth center, the ball field, the health center, festivals continue to rely on their own volunteers because of a $100,000 reduction in the available funds?

Even more puzzling is why the advice offered by the Ocracoke’s Occupancy Tax Board was ignored? The suggestion to have a 2- to 3-year trial with professional tourism firm funded from the existing funding and directed by our local board (not the county) is a much better option.

The county’s proposal to have a board consisting of members of the lodging group direct the spending of the money neglects a significant portion of the Ocracoke business community and the general population. For years Ocracoke had struggled to get what we consider a fair share of county funds. The legislation that established the occupancy tax was the first time that Ocracoke was given some say in how tax dollars were spent on Ocracoke.

We will be conceding (permanently) control of a big chunk of dollars that the legislature authorized for the benefit of Ocracoke. This is not another just a missed opportunity. This a step backwards for Ocracoke.

For related stories on this issue, click here and here.

Categories: Opinion