The Tourism Council expects to reap an estimated $3.8 million in sales tax revenue in the first four months since the new tax has been collected.
But has the haul been what the Tourism Council expected? That’s hard to say, because it’s the first time the tax, which was created by Senate Bill 942, has been collected, said Tourism Council administrator Jody Puckett.
“That’s a hard one to answer because we don’t have anything to compare it to,” Puckett said. Puckett is the temporary administrator for the Tourism Council, which continues to search for an executive director after the departure of interim executive director Bob Harris in October.
The SB 942-created sales tax surcharge wasn’t collected last year, as it first went into effect when the legislation became law in July. SB 942 increased the Williamsburg, James City and York sales tax by 1 percent, to a total of 7 percent, to generate funds that will be used to market the region to overnight tourists. That legislation also redirected an existing $2 transient occupancy tax to the Historic Triangle Marketing Fund, which is overseen by the Tourism Council.
The Tourism Council expects to receive its first disbursement of sales tax revenue from the state in the near future, although there isn’t a specific timeline on when that money will be in hand. The upcoming lump sum is estimated to be $3.8 million and represents the sales tax revenue collections of July through October earmarked for the Tourism Council, Puckett said.
The Tourism Council doesn’t know exactly how much of that money was collected in each locality. The state collects the sales tax revenue from localities and then passes it on to the Tourism Council, Puckett said.
The Tourism Council intends to coordinate with the localities to figure out how much money is coming from each one, with Puckett saying it’s important information to track visitation trends.
“We can track visitors and have a better understanding of who is coming to the destination,” Puckett said.
Tourism Council staff estimate the council can expect $10-$12 million through the sales tax and $2 transient occupancy tax for its usage in its first full year of collections in 2019 based on revenue trends in 2017.
For those keeping count, you’ll want to double that number for a total anticipated haul of up to $24 million — Williamsburg, James City and York get half of the money, based on where the taxes were collected, while the Tourism Council gets the other half. It’s up to the localities to decide what to do with their cuts.
The Tourism Council is gearing up for its first marketing campaign, which will take place in 2019. Staff expects to have a presentation of the campaign and budget in front of the Tourism Council later this month, Puckett said.
Ever since SB 942 went into effect, those who shop in local stores and eat in local restaurants have gotten a slightly higher bill.
But it’s unclear to what extent the sales tax increase has influenced customer spending in local businesses. The Virginia Gazette inquired with about 30 local businesses, most of them restaurants, about the topic and received two responses.
Adam Steely, Blue Talon Bistro’s general manager and owner, weighed in to say the sales tax increase hasn’t caused any problems in his experience.
“We have heard some conversations about it as a political issue but not one guest has mentioned it upon receiving their bill. It stands to reason, as the impact on a diner’s overall expense is negligible,” Steely wrote in an email.
At Eastern Floor Covering, a small number of customers have taken their business out of the Historic Triangle to avoid the tax.
In the last few months, about two or three customers have specifically conducted their business at the company’s Newport News location, rather than the York location, in order to avoid the higher sales tax, Eastern Floor Covering president Steve Ward said, adding that it was the customers’ choice and the business didn’t suggest the tactic. The sales tax is 6 percent in Newport News.
But for the most part, customers either don’t care, don’t notice or are content to just grumble about the increase, Ward said.
“I think a lot of folks don’t like that one area pays more,” he said, adding the caveat seems most people generally accept the tax’s existence.
The average floor covering job, which includes paying for floor materials and installation, runs about $5,000. That means that people intent on avoiding the tax save about $50, Ward said.
Ward, who is also the president of the York Chamber of Commerce, said he hasn’t heard reports of customers changing their spending habits at member businesses due to the tax.
Ultimately, the tax is a net positive for the region, Puckett said, adding the Historic Triangle’s property tax rates are lower when compared to the rest of the Peninsula, at least in part due to the tourism industry’s revenue.
Williamsburg, James City and York have real estate tax rates of 60 cents, 84 cents and 80 cents per $100 of assessed value, respectively. Compare that to the $1.22 per $100 of assessed value in Newport News, or the $1.24 per $100 of assessed value in Hampton.
“The revenue steam is really an investment in our community,” Puckett said.
The temporary administrator for the Tourism Council also oversees the chamber’s sales staff and is assisting in the transition from the Williamsburg Area Destination Marketing Committee to the Tourism Council, which replaces WADMC. Puckett said she’s a contractor and is paid approximately $50 an hour and works 30 to 35 hours a week. Puckett had her first official day of work Oct. 30 and expects to continue to assist the Tourism Council until an executive director is hired.
Jack Jacobs, 757-298-6007, firstname.lastname@example.org.