Aug. 17, 2006 – Senators called a General Fund budget recommendation of $3.4 million for the Tourism Department "embarrassing" during the second round of budget hearings Thursday. Several suggested that the department instead receive more funding for advertising and staff salaries, so efforts to market the Virgin Islands on an international level can continue.
According to Tourism Commissioner Pamela Richards, the department sets its advertising budget based on the amount of revenues collected through the hotel room tax. While the advertising budget this year totals $8 million, Richards said Tourism continues to cut costs by paying "below industry standards" for many goods and services, and "taking advantage" of relationships forged with partners in the tourism industry.
"That's not really the way you're supposed to do business," she said.
Richards added that the advertising budget could be increased if the Bureau of Internal Revenue periodically checked to see if the hotels were paying taxes, and whether the revenue figures matched the number of overnight visitors to the territory. "It's possible that we're losing revenues," she said, adding that Tourism is currently not able to track whether the occupancy rates measure up against what the hotels are paying in taxes.
She said the hotels function under an "honor code," where it is assumed that the revenues generated from the hotel tax are remitted to IRB.
Richards' statement raised the ire of Sen. Louis P. Hill, who said that he had recently talked to IRB Director Louis Willis about the same issue. "I asked him how long it's been since he went and checked if the hotels are paying their taxes, and he said something like six years ago," Hill said.
After perusing Tourism's written presentation, Hill took exception to the fact that salaries paid to Tourism employees appear to be "lower than they should be," and asked Richards if an increase for workers had been factored into the budget.
Richards said an increase was included. However, she said, "The salaries you see there are my efforts to work within a $3.4 million budget."
Richards' candor seemed to impress senators, who commended the department on "doing more with less."
"Three million is not enough to give to the agency that drives our economy," Sen. Neville James said.
In addition to the $3.4 million General Fund budget, the department will also receive almost $2 million in the miscellaneous section of the FY 2007 executive budget (to fund the V.I. Rum Industries Inc. contract to staff the "rum booths" at the territory's airports), along with $1.45 million in various disbursements and appropriations – including $675,000 for the V.I. Carnival, Crucian Christmas Festival and St. John July 4th Celebration.
Shifting from the subject of the budget, James asked Richards about Tourism's efforts to bring cruise ships back to St. Croix.
While Richards said Tourism is aggressively marketing the "St. Croix brand" on the mainland and abroad, she said the island would suffer if certain issues were not resolved. This includes increasing St. Croix's hotel room capacity and improving the quality of service offered to visitors by the local community.
Richards added that St. Croix's economy, because it has "long been in the shadow of St. Thomas," would not regenerate itself overnight.
"Instead, it's going to take the efforts of the entire community, all of us working together, to make sure our product doesn't fail," she said.
Once St. Croix's economic fate is resolved, however, the Virgin Islands could be a heavy hitter in the tourism industry, Richards said. She added that the territory has been the subject of marketing campaigns in places such as New York and Italy, and has also been featured in a number of magazines, brochures and television commercials.
"We're really poised to take off," she said. "And I think it really could happen in the next couple of years. I really do."
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