Cape May might be missing the boat. Not the ferry or a whale watching trip, but a fiscal boat.
Last August I felt compelled to write about lodging taxes in Cape May County. I’m feeling a similar compulsion this year. Data released at this week’s council meeting was encouraging and concerning at the same time.
The encouraging news is beach tag revenue was up almost sixteen percent over tag sales in 2014. 16% growth in revenue is pretty good for any business, let alone in a questionable economy. Sure, tag prices went up a little, which contributed to the increase. There was also an extra week at the end of the summer due to the late Labor Day holiday.
The disturbing news, to me, is the city manager’s report that occupancy tax collected by the state and turned over to the city shows little or no increase year-to-date by July of 2015. There is a 60 day delay in the reporting from Trenton to the municipalities. The city gets two percent of the 14 percent collected by hotels, motels and bed and breakfasts.
The increase in beach tag sales certainly is an indicator of more people coming to Cape May. The flat-line occupancy number is a little scary. July certainly seemed like a busy month. Most if not all lodging establishments had full houses on the peak weekends. So why no growth?
Could it be that the lodging industry kept rates down or the same as 2014? Could it be that each year there are fewer and fewer bed and breakfasts?
Tourism taxes were created by Governor James McGreevey in 2003. Originally intended as a vehicle to fund cultural agencies and the arts, that hasn’t been the case in the past few years. Much of the collected tax finds its way into the general fund. If the industry collects less tax will it hurt the arts?
The fiscal boat that Cape May could be missing is hidden in the definition of short term rentals and who collects or doesn’t collect occupancy tax. In Jersey City, New Jersey council redefined short term rentals to include the new and growing Air B&B market. Perhaps it’s time for Cape May to take a look at where the tax revenue on lodging is derived. It might startle people to realize how many Air B&B’s exist in Cape May.
According to research done by attorney Mark Miller, a 2008 lawsuit by a hotel motel association estimated that the State of New Jersey could gain $345 million if condos and whole houses collected sales taxes similar to the lodging industry. Let that number sink in. How much more would it be in 2015?