BOC Votes to Raise Occupancy Tax
In a unanimous vote on Monday, June 5th, the Hyde County Board of Commission approved a motion to increase a tax on lodging from 3% to 5%. The new rate will go into effect January 1, 2018. Approximately $320,000 in new revenues will be generated from $16 million dollars of room sales. By statute, a five-person Tourism Development Authority board must and will be appointed to make recommendations on how to disperse the fund, of which 2/3 must be spent on tourism, travel, and development, per the 2006 NC law allowing the tax increase. The remaining 1/3 can be used for promotion or capital improvements, such as walking trails or public restrooms, said County Manager Bill Rich, who proposed the changes to the Commission in his 2017/2018 budget.
Four hotel and inn owners who attended the meeting stood up and walked out after the vote. Former Commissioner Darlene Styron stayed to express her disappointment with the decision. "I haven't heard anyone but government representation supporting this increase," said Styron. She would like the county to explore other revenue streams, like an increased sales tax or food and beverage tax.
Ocracoke Island Realty owner Bob Oakes attended the meeting in Swan Quarter, and spoke against the tax increase. OIR represents over 300 property owners on the island, and only 5 of 114 respondents to a survey by the realty company supported the rate increase, said Oakes. How a question is asked can influence the answer, acknowledged Oakes, who said "probably some of my feeling got in" when presenting the issue to homeowners.
"Occupancy tax is an opportunity cost to property owners. If we thought we could sell that room for 2% more, we would," said Oakes. He pointed out that non-resident homeowners contribute to non-profits like the Volunteer Fire Department and Ocracoke Child Care, and that OIR matches those donations.
In his statement, which Oakes characterized as "respectful disagreement," he encouraged the county to "slow down a little" with their marketing efforts, and to focus instead on direct marketing of festivals and events hosted by existing island non-profits. It is easy to overspend on marketing, and strategies and tools for advertising are rapidly changing, he said.
The current 3% OT has been collected since 1992, and has helped purchase a new Fire Hall, the Community Center, and Ocracoke Community Park, and has distributed funds to the Health Center, Child Care, Ocracoke Preservation Society, Ocrafolk Festival, WOVV, and other island non-profits.
Innkeepers, hoteliers and property owners are concerned that the new rate will repel business, and expressed their concerns in two public meetings held on Ocracoke in May.
Can the decision be reversed "if in a year Ocracoke don't have anybody staying there anymore?" asked Commissioner Ben Simmons. Yes, should Ocracoke turn into a ghost town in 2018, the rate increase can be reversed by a vote of the Board of Commission.
Neighboring counties Dare and Carteret both collect 6% in Occupancy Tax.
County Manager Rich would like the OT to pay for $100,000 for additional EMS service on Ocracoke during the busy tourist season. His original budget had that amount going directly to the county.
At one point the OT gave $180,000 for medical services, and that amount is now $18,000, noted one commissioner. With the OT no longer absorbing that expense, it is now on the county.
While Pahl is not opposed to using OT money for medical services, he is opposed to bypassing the work and recommendations of the OT board. "We should not undermine the authority and viability of that board," which has had a system in place that has worked well for years, said Pahl.
Board Chair Earl Pugh agreed that it was best to let the OT board "do it's job." The county will still have the option to ask the OT board to give money for EMS service. Truth be told, the Board of Commission has final approval of how the OT fund is distributed, and is under no legal obligation to approve the recommendations of the local board. Historically, however, they have always approved the budget submitted by the OT board.
How will it work? The current OT board, with oversight of about $400,000 yearly collected by the original 3%, can spend the money for any general purpose on Ocracoke. The new Tourism Development Authority, allocating the new 2%, will be operating within tighter parameters, and spend on travel development and infrastructure improvements that support tourism.
Rich anticipates the TDA will work hand-in-hand with the OT board, and that some of the requests funded by the existing OT will be handled by the TDA.
Does all that information make you want a drink? The Hyde ABC board is in the black, and expects to see a 5% increase in sales in the next fiscal year. The ABC board hopes to add $18,000-$25,000 to county coffers this year.
Pahl took a moment to say that he believes the "existence of ABC in NC is an example of government overreach."
While that issue must be addressed by the NC legislature, Pahl was happy to have a rare opportunity to "sound like a conservative."
Another tax rate increase should be expected by Ocracoke residents in 2018. Property values on the island have fallen since 2008, and the 2016 re-valuation saw $100 million less in total valuation. The budget office anticipates raising the property tax rate from .64 cents per $100 of value to .73 cents. The rate will go up, but most property owners will pay the same amount of tax.
In other budget news: The Hyde Inspections Department will get an additional position, and Chief Code Enforcement Officer Jerry Hardison will get a raise.
School Superintendent Dr. Lattimore made a budgetary plea to the Commissioners: "Be considerate of the request from the Hyde County Board of Education. Don't short change our children." The board operates separate entities because of Ocracoke's island school, said Lattimore.
