SANDUSKY - Erie County's commissioners are seeking to amend state law so that they can access millions of dollars of bed tax money that currently goes to Shores & Islands Ohio, the local tourism bureau.
The commissioners want the authority to use up to two-thirds of the money, which generates about $4.4 million that currently goes to Shores & Islands, arguing that the money is needed to cover the expense of hosting a huge number of tourists.
Many local governments and businesses oppose the idea, however, including the Sandusky city commission, the Greater Sandusky Partnership, Cedar Point and Kalahari Resorts & Conventions.
This collective claims the money should be spent for its intended purpose of promoting tourism and also believes the proposal has been rushed through with little transparency or public discussion.
According to a letter written by local businesses, the amendment to the state budget bill is backed by Sen. Theresa Gavorone, R-Bowling Green, who could not be reached for comment this week.
The proposed change
According to Erie County treasurer Caleb Stidham, who backs the proposed change in the law, the 4% lodging tax, also known as the "bed tax," generates more than $8 million a year with:
• Half of the money going to Shores & Islands Ohio and other tourism-related expenses
• The other half going to pay off the bonds issued to build the Cedar Point Sports Center on Cleveland Road (U.S. 6) in Sandusky
"The Cedar Point Sports Center came about as a result of (former state Senator Randy) Gardner, (Erie County commissioner Pat) Shenigo and Cedar Fair partnering to change state law and allow the county to invest in that project," Stidham said.
Testifying on May 6 before the Ohio Senate's government oversight and reform committee, Erie County commissioner Matt Old explained that the proposed amendment to the state's lodging tax law would apply to 11 counties that have a population of less than 100,000 and bed tax receipts of more than $500,000 a year. They are Ashtabula, Athens, Belmont, Clinton, Erie, Guernsey, Hancock, Hocking, Holmes, Ottawa and Tuscarawas counties.
Old said the proposal is that up to two-thirds of the bed tax money could be spent to "support three vital services that are impacted by tourism," public safety, economic development and public infrastructure. The other one-third would still go to the local tourism agency, Old said.
"I strongly believe this change is necessary for communities like mine," Old said. "It is fundamentally unfair that our residents are asked to shoulder so much of the burden for services that are often utilized by tourists. It doesn't make sense to restrict the use of such a meaningful sum of funds to a narrow purpose with no accountability. The current system deprives residents and their elected leaders of the ability to make decisions about what is best for their community."
Stidham also testified before the committee.
"I am here today asking lawmakers to consider a commonsense change to the lodging tax," Stidham said. "We are advocating that decision-making be partially restored to elected leaders who are accountable to voters. Local taxpayers should not be asked to pay more for costs created by thousands, even millions, of visitors."
Local businesses respond
Larry Fletcher, CEO of Shores & Islands Ohio, said that while the bulk of the more than $4 million raised by the 2% of the bed tax goes to his agency, there are also smaller county-specific grants.
As for his agency, it has 18 year-round full-time employees, a few year-round part-time employees and an additional eight to 10 part-time employees during the summer tourism season.
Fletcher testified before the Ohio Senate's finance committee and said the proposed change "threatens the health of an entire regional economy built around tourism."
"Every size business in our region - whether it's a family-run bed and breakfast, a fishing charter captain, a retail shop or a major attraction - relies in some way on our organization to bring visitors here, connect them with experiences and encourage them to return," Fletcher said. "These things don't happen by accident. They happen because of strategic, sustained marketing and strong partnerships across our communities."
A number of local businesses have written a joint letter opposing the change.
The 2% tax that goes to the visitors bureau, "is a modest but critical investment," generates a huge amount of local revenue, including $1.6 billion spent in Erie County alone. That spending generates tax revenues that support local governments, the letter reads.
A related letter to the Erie County commissioners accuses them of trying to rush the change through with little discussion.
"There has been no public dialogue, no stakeholder engagement and no explanation provided to the businesses that generate the vast majority of this tax through the guests we attract and serve. This is not how public decisions with far-reaching economic implications should be made," that letter states.
The letter is signed by Richard Zimmerman, CEO of Six Flags, Cedar Point's parent company, and by Todd Nelson, CEO of Kalahari Resorts. It was also signed by top officials at Cedar Point Sports Center, Hoty Enterprises, local hotel owners Sortino Management and Development, Ghostly Manor, local hotel owners Ruta Management and Explorer Hospitality.
Although the Ohio General Assembly's current session began in January, many local officials and businesses only heard about the proposed change this month. A new state budget must be approved by the end of next month.
Eric Wobser, CEO of the Greater Sandusky Partnership, said his organization is open to discussion about the best use of bed tax money but believes affected businesses should be included in the discussion.
"Our concern is the lack of transparency and engagement of the many large and small businesses that drive our destination economy," Wobser said. "This change would have a detrimental impact on the businesses and communities that make up Erie County, and they should be at the table at the outset of this discussion."
Dick Brady, the Sandusky city commission's president/ ex officiio mayor, sent a letter to Gavarone, arguing that the use of the bed tax has provided a great deal of benefit to Erie County and said the county commissioners want only a "small fraction" to go to Shores & Islands Ohio.
"I would be remiss not to point out that the county commissioners recently opted out of receiving $8 million of property taxes from county residents," Brady wrote. "Now they are asking to be allowed to raid the checkbook of Shores & Islands to fund projects that have been funded for decades with the same property taxes they chose to forgive."
The proposed change would not just apply to Erie County but also to Ottawa County. But Ottawa County commissioners have not expressed any interest so far in redirecting bed tax money.
"We have not had discussions on the bed tax at this time," said commissioner Mark Coppeler, who also serves as board president "We have not had issues with Shores & Islands Ohio."
What do state lawmakers think?
Although the letter from local businesses states Gavarone submitted the Senate amendment, her staff did not immediately confirm that. Gavarone sent word via her staff that she did not have time to talk this week but would answer the Register's questions next week.
State Rep. D.J. Swearingen, R-Huron, said he was asked earlier to submit the budget amendment but said the request arrived too late.
"I got an email to submit the amendment the day our amendments were due for the House omnibus version of the budget. I had all my amendments in final form at that time to be submitted to the House Finance Committee," Swearingen said.
As for the proposal itself, "I think that it's important to listen to the voices of the businesses who are actually subject to the tax," Swearingen said.