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HomeNewsLocal news$4.5 Million Hotel Tax Transfer Vetoed

$4.5 Million Hotel Tax Transfer Vetoed

The USVI has too many empty rooms and needs to spend more on advertising, according to both the USVI Hotel and Tourism Association and the St. Croix Hotel and Tourism Association. The two groups issued a joint statement Tuesday urging the Legislature not to transfer $4.5 million in hotel room occupancy taxes from tourism advertising to the General Fund.

Gov. Kenneth Mapp proposed legislation [Bill 31-0422] appropriating the money from the Tourism Advertising Revolving Fund to the General Fund, as part of a package of budget bills approved by the Legislature in September. (See Related Links below)

It was one of several transfers aimed at lessening a projected $170 million shortfall between expected revenues and budgeted V.I. government expenses for Fiscal Year 2017. The government is borrowing to cover a remaining deficit of $110 million to $116 million. [FY 2017 Budget]

But Mapp administration officials have said the only way to address the territory’s unending structural deficits is through economic development. And tourism is a vital sector of the territorial economy.

According to the St. Croix Hotel and Tourism Association, although Mapp proposed the transfer, he turned around and vetoed it once he learned that it, along with another $6 million appropriated from the Tourism Advertising Revolving Fund, would reduce advertising funds by 39 percent for the year.

USVI Hotel and Tourism Association Chairman Scott Derrickson and St. Croix Hotel and Tourism Association President Suzanee Rosbach penned the joint statement from the two groups.

"It is the only rational step in the face of the severe economic blow to the tourism industry as a result of cancellations relating to the Zika virus," they assert. “In the first three months of Zika being found in the Caribbean … the entire region saw a reduction in market demand of 2.4 percent, representing millions of dollars.”

Within the USVI, Zika-related cancellations amounted to more than $2 million from December 2015 through March 2016, and those numbers do not include anyone who may have simply never booked a room to begin with, according to the two groups.

With Cuba opening up to visitors and other islands spending more on advertising, this "is no time to reduce the revenues available for marketing," they say. If the veto is overridden and the funds transferred, the territory will spend $17 million on advertising and promotion.

The funds come from some 5,000 hotel rooms, heavily concentrated on St. Thomas. For comparison, Barbados, with 6,500 rooms, will spend $45 million; Bermuda, with 2,761 rooms, will spend $38.5 million; and St. Lucia, with 4,800 rooms, will spend $19 million, they say.

"Reduction of spending on marketing will undoubtedly result in a reduction in the number of visitors. Fewer visitors in the end would negatively affect employment in the industry and the purchase of goods and services locally, which would reduce consumer spending and tax revenues from businesses," the group says in its statement urging the Legislature not to override the veto. “Shifting advertising dollars to other purposes simply will not solve the problem,” they say.

This veto was not mentioned in Government House’s most recent public statement on the bills approved in the same session. The Legislature’s bill tracking system did not yet have information on the governor’s action on this bill and calls and emails to Government House for comment had not been returned as of 8 p.m. Tuesday.

The session scheduled for Monday may also address several other vetoes.

Mapp vetoed a bill creating birthday presents to centenarians. "While I commend the intent of the sponsor, I must ask the Senate if you collectively believe that we should tax our citizens and our economy to provide birthday presents to others? … Is it an appropriate use of tax revenues," Mapp asked in his message to the Legislature.

He also asked if people should get the gift even if they are wealthy or if they are not of sound mind.

Mapp also vetoed two bills increasing the time limit for emergency commitments, saying in both cases that they increase the minimum time as well as the maximum time.

"In addition, the measure also deletes language that required the court to determine that the Department of Health is able to provide adequate and appropriate treatment for the individual and that the treatment would benefit the individual," Mapp said.

Mapp also vetoed a zoning variance in Estate Green Cay on St. Croix to allow Mike Meluskey and his wife, veterinarian Laurie Bailey, to operate a veterinary clinic. He said his concern was that the bill did not include a condition recommended by the Department of Planning and Natural Resources that the clinic only be allowed to hire one employee that was not a family member.

Mapp also vetoed a rezoning for Moravian Church property in Estate Emmaus, St. John, saying the legislation does not accurately describe the land in question.

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