The Case (So Far) Against Increasing the TDA Tax

By Scott Lilly | Mar 16, 2014

The Case (So Far) Against Increasing the TDA Tax

 

A controversial proposal to increase a tax on lodging business in Haywood County has not been represented well on either side of the issue.  From the way this tax was originally proposed to the current status of stepping back to get real facts and figures, those that support the idea and those that don’t have yet to make a convincing case either way.  It’s a topic that is laced with politics, ideology, and a history that makes it difficult (not impossible) to think objectively about the issue.  As this kind of topic stirs passionate feelings, it’s best to call out any biases before representing an analysis of the proposal.  As such, I am a conservative Republican who begins my thought process on the side of “less taxes and government spending” while trying to see if I can convince myself that this is a good idea.  So far, I’ve not been able to convince myself.  I will explain why that is.  Perhaps someone on the pro-tax-increase side will understand my reservations, realize that there are lots more like me, and respond in public with a well-thought rebuttal to help persuade me and those like me.  (Oh, how a high-school debate team could remind us grown-ups how to properly hold a constructive debate!  Wouldn’t it be fun to hold this kind of debate in a softly-lit wine cellar somewhere?)

To begin, I see government and the taxes it collects as a “necessary evil” of sorts that in at least some way limits my absolute freedom.  I understand that for people to live in society, that’s a necessary part of life.  So I’m looking for what’s “necessary” about our government collecting more taxes from lodging owners and patrons.  So far, the people proposing the idea have not presented any justification to say why this tax is necessary.  Literally, government officials that support this tax are on record saying, “We just need to get the additional revenue and we’ll figure out what to do with it later.”  As someone who begins analysis thinking less government and taxes is good, I cannot switch over in support of the extra taxes with no plan at all.  In fact, because there is no stated plan for the funds, it actually makes me suspicious that there might indeed be a plan for the money but disclosing what that plan is would reduce support for the tax; so “no plan” is better than whatever is in the minds of those proposing the tax.  A tax is hard to support.  A good plan is hard to object.  (For you pro-tax-increase people, that’s a big hint!)

Next is the performance of the TDA itself, the government committee that is tasked with controlling the money.  Two concerns here.  First, the TDA employs people to spend the money.  The data about how that is done is neither well-presented nor represented.  To convince naysayers to support additional funding, someone needs to include with the proposal an accounting for how the approximate $1,000,000/year funding has been spent for the last say 4 years.  Some cheery-picked data has been mentioned in some forums.  But a full-disclosure, pants-down, lay-it-on-the-table presentation of the numbers must occur to win any respectable support.  We need to see how much of the tax is going to employment-related benefits, perks, travel, etc.  (aka “administration)  We need to see how much rent is paid and to whom.  We need to see detail and the all-important statistic that ANY charity is asked to disclose: what percentage of the funds are actually spent on the mission verses how much is spent performing the administration of spending on the mission.  The second concern with the TDA is that it’s managed by a committee of 15 folks from various parts of the county.  As we recently saw with Maggie Valley’s “foul ball”, “stacking the deck” of who manages the TDA is full of politics!  As a worst case scenario example, Maggie Valley’s Mayor is on record saying the Maggie Valley TDA representative is to represent the Maggie Valley Board of Alderman and not the citizens of Maggie Valley.  I hope somehow his statement was not a true reflection of his thought process.  But as a conservative Republican who believes government serves The People (and not the other way around), this point must be clarified before proceeding any further: who manages the TDA and how is that decided?

Finally if I can ignore the concept that collecting taxes with no defined purpose is bad government; if I can somehow have faith that the TDA and those that manage it will have taxpayers, business owners, and visitors best interests in mind when making decisions, I then arrive asking myself what this TDA government entity will attempt to accomplish with more than a million dollar budget each year.  Frankly, I haven’t seen any competent organization here either.

We have a heavily populated county flanking our east which has a comparatively huge TDA budget.  They tax more of a percentage from their visitors, they have way more lodging and visitors of whom to tax, and they are rumored to be ready to increase their tax in part as a response to our proposal to increase our tax.  Haywood County has no hope to build anything that can’t be built bigger or better than Buncombe can build.  It’s a lose-lose proposal to suggest otherwise.  If we build something and it’s a failure, it will cost us dearly and Buncombe will just use that experiment to their advantage to build something else.  If we build something and it’s a winner, Buncombe could (and likely would) build it bigger and better.

The process is all wrong here and I hope most of the opposition to this TDA tax proposal is due to this process problem.  Here is a recipe to have a meaningful and constructive debate on the issue:

Step 1: Debate and define Haywood County’s identity.  Why would tourists want to visit Haywood County?  It’s not because we have the best infrastructure or public capital investments that tourists want to see.  We don’t have that today and we will never win that position so long as we’re next door to a Buncombe County.  What makes Haywood County unique and attractive?  What can you get here that you can’t get in neighboring counties?  If we can’t out-spend Buncombe County, then perhaps we should embrace something Buncombe can’t do: out-value them and/or recognize that we’re quainter (small-town-living) than Buncombe can ever be.

Step 2: Develop a marketing strategy.  Once Haywood County has found its identity that we can adopt county-wide, only then can we successfully develop a marketing strategy to prospective tourists.  Making YouTube videos will have a different cost requirement than maintaining a visitor center or building a public transportation hub.  Throwing “everything” out there is not a strategy.  Generic “come to Haywood County” billboards are likely not effective.  Taking on “whatever we can afford” is not a strategy in itself – although it’s part of the next step.  A competent strategy is necessary to get to the next step.

Step 3: Budget and plan the strategy.  Once a marketing strategy is conceived that will promote Haywood County’s identity, then funding that marketing strategy (or parts and phases of it) becomes a reality.  Is the TDA the right kind of entity to administer the marketing plan?  Can the marketing be more effectively/efficiently outsourced to private sector professionals or groups?  Will the existing 4% tax be enough to fund the marketing plan?  Will additional funding be required; and will 6% be enough?  Could we actually REDUCE the tax and still get the job done?  Will private associations do the job better without public monies if the TDA disbanded altogether?  Could a total absence of local lodging taxes actually make a bigger marketing statement as a differentiator of “value” and “quaintness”?

Step 4: Decide some metrics to perform regular measurement of how effective we are with the marketing plan.  If we spent the money did we get the desired result?  If we spend $1,500,000/year, can we point to at least $1,500,000 in benefit to the County?  Put these in UP FRONT so you don’t let those in charge of the spending also be in charge of how they should be measured.

Using the prescribed method, we will have at least a pretty good chance of using tax dollars wisely to everyone’s delight.  All that being said, there are some red-flag concerns I have on this matter.  Not that any of these concerns in themselves are indicative of a problem, but they stack up to suggest there is a problem:

A)     The TDA has for its purpose the marketing and promotion of Haywood County to prospective tourists.  I find it disturbing that the TDA has done an awful job promoting and marketing the idea that it’s a good idea to increase its funding.  If they can’t effectively promote and market its own agenda, how should I expect the TDA to promote and market the County for tourism?

B)      Politicians are literally on record in support of a tax that has no specific purpose.  That is very bad government and they ought to be shamed.  Even more disturbing is that government is asking the public to support this new tax without saying why.  I suggest the public would be correct in humiliating any government official that wants to burden our businesses and patrons with no competent explanation.  (Sorry that’s so harsh, but the burden is on you, government, to justify your request for “more”.)

C)      There are too few details and a competent accounting of what the TDA has done in the last 4 years is lacking in public conversation.  Can anyone point to any significant benefit that is undisputedly due to the TDA’s activities?  Can anyone measure Return on Investment that says Haywood County got more than a million dollars of benefit each year for a million dollars invested into this TDA?  If this argument could be made, we would have heard it loud and proud already.  There is a deafening silence on this detail.

D)     When I see a kickback structure, I am skeptical of a conflict of interest.  The TDA sends 1% of the taxes collected back to the originating zipcode for spending.  That’s a kickback and a conflict of interest.  That suggests the people who stand to benefit from the tax are the ones promoting the tax.  In my opinion, their opinion doesn’t count.  (Admit it, that’s kind of a funny statement.)  People who have lodging to offer are the ones that would have the most benefit from an increase in tourism.  As such, they are the ones MOST motivated to increase tourism and keep their rooms full.  It is THEIR opinion if the TDA would be effective that should be most relevant.  The fact that their opinions are not sought after nor respected by those in charge is a problem.

E)      A lack of meaningful dialog on the matter means this is just pure politics driving the issue.  That’s not good for anybody – including the politicians.  Republicans ought to be skeptical yet receptive, considerate, and genuine to any proposal made by Democrats.  Democrats ought to fairly and thoroughly lay out the proposal and represent the proposal for any questions or challenges made by republicans.  I have seen lots of mudslinging on this topic and little constructive debate.  The most refreshing dialog I heard about was at the last TDA meeting where (I believe the Chairman) suggested the movement be paused so that all the facts and details can be separated from rumors, disinformation, and misinformation.

F)      When I hear government officials saying this TDA tax is a good way to get revenue while not having locals pay for it, that really rubs me wrong.  Haywood County can use Municipal Bonds to get money for any public works project.  If we won’t spend our own money for any particular purpose, when why should be support spending someone else’s money on any particular purpose?  That’s kind of like someone in government deciding to buy a new city truck when the old one might work just fine.  They might be motivated to spend the money just because they have the budget.  But if it were their own money, they would almost certainly make do with a city truck that might just have a few scratches in the paint.  I don’t like government spending “other people’s money” and anyone who tries to justify spending that way ought to be shamed.

G)     Some of the things that I’ve heard come from the TDA are surprising to me: Youtube videos, a website, billboards, visitor centers. 

  1. Any business in Haywood County can make a Youtube video for themselves.  Do we really need the government to take money from lodging businesses and patrons to make those Youtube videos generically for them?
  2. Same thing applies to the website by the TDA.  Godaddy has a great package deal that is quite affordable for making and hosting a website.  Listing area lodging options is easily done in Expedia, Travelocity, Google, or other travel services.
  3. A generic marketing of Haywood County by billboard is arguably a worthless idea.  That being said, I’m not the expert.  I’d just like to see some data on how someone thinks taking money from area businesses to do this provides measurable value at least equal to how much money was taken from the area businesses and patrons.
  4. The concept of a staffed visitor center located in the town where the visitors are already located is an odd concept to me.  I can absolutely appreciate those displays of pamphlets of all the area attractions.  I see those all the time in hotel lobbies and restaurants I visit.  Go into the Waynesville visitor center during the hours they are open and count the number of legitimate potential visitors that got something extra they wouldn’t have gotten by a kiosk in their hotel lobby or restaurant.  Then count the dollars spent on those visitor centers.  Do the math.  Then I’d like to see if anyone can invalidate my concern.  (Really, I want to hear that we haven’t been wasting money.)

In all fairness, as much as I’m opposed to too much taxes and too-big government, I could suggest some ideas that would be interesting.  But we don’t start the conversation here!  I’m just including my thoughts to share that a TDA tax would not be entirely bad if the Return on Investment would be good for “everyone”.

1)      Could a TDA tax be used to extend the Bryson City Railroad tourist thing from Dillworth to Hazelwood?  Would whatever that cost benefit our town at least as much as the investment?

2)      Is there any potential to partner with Raleigh and other counties to get a passenger train from Charlotte to WNC?  (Yeah, I know that’s likely a radical idea that likely won’t work – but I heard it seriously mentioned once in Charlotte/Raleigh years ago as NC I think already sponsors passenger service from Wilmington to Charlotte.)

3)      Would having a public/courtesy shuttle between the Asheville Airport and points in Haywood County increase tourism more so than the cost to provide that service?

4)      Is this ballpark thing I hear rumors about worth some real analysis to determine if it would bring in tourists and not be “stolen” as an idea that other counties could build bigger/better?

5)      Rather than staffing Haywood County Visitor Centers in Haywood County, would it be more effective focusing that kind of effort in busy walk-in travel companies in Charlotte, Greensboro,  New York City, or England for that matter?

Scrap everything about the 4% tax already collected and started over, could we do better and do we really need “more”?  Throw out the YouTube videos, the visitor centers, the billboards, and employment-related costs.  Blank slate, start over.  What is it that the TDA really needs to do for Haywood Country that local businesses and associations can not and should not do for themselves?

For you Democrats out there, you need to engage in the debate.  I know there are many Republicans that have good common sense and will help you form a valid plan – if one is possible.  For you Republicans out there, argue your objections clearly and logically.  It’s in everyone’s interest to speak and act with integrity on this matter.

I welcome constructive debate and comments below.

Comments (3)
Posted by: Charles Zimmerman | Mar 18, 2014 10:28

          A lot of words when James Madison alreddy established no business should have to support another business in Federalist No. 10.

          Any public works project must be paid for by the public at large.

          "Occupancy tax" only applies to certain and particular businesses while leaving all others in a subsidized advantage not earned from normal business in clear violation of OUR governments obligation to equally protect "All persons", while punishing passers-by for merely choosing to "occupy" a room for the night(s).

              What other counties choose to do is irrelevant.

              Any or all or none of the several tourist-centered businesses are free to advertise as they wish, with the full knowledge that doing so not only informs potential customers of their business, but can result in customers choosing another competing business instead. That is the cost of a free market. This cost should not be borne by We the people by the use of a TDA.

                C.Z.

         



Posted by: Scott Lilly | Mar 18, 2014 10:36

So then it's official: Liberals and Conservatives agree -- this is a bad idea. 

 

So who can argue this is a good idea and how can they make that argument?  Where is their side stated?  Can they answer any of my concerns?  Or do the government officials need to be formally and publicly called out individually on this?



Posted by: Charles Zimmerman | Mar 18, 2014 11:09

               Presently, I cannot petition County Commissioners. Civil case involving two of them, but not against them. Neighbor.

                You have the facts. You can research and comprehend the Founding Principles involving "No Taxation Without Representation", equal protection, etc. Make your case.

                 Bear in mind that fatted cats don't like not being fed. They will retaliate. A civil liberties suit will more than likely be necessary.

                 The TDA existence is government over-reach, by all means.

 

                C.Z.



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