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Senator Michael Testa

District 1

LD1 Legislators Urge Passage of Tourism Tax Fair Share Bill

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Noting the incredible success of Jersey Shore counties and localities during the Summer, the First Legislative District trio today urged the Legislature to pass their Tourism Tax Fair Share bill to help keep more tax dollars in the regions which earned them, not just the areas which Trenton deems worthy of support.

Noting the incredible success of Jersey Shore counties and localities during the Summer, District 1 lawmakers urged the Legislature to pass their Tourism Tax Fair Share bill to help keep more tax dollars in the regions which earned them, not just the areas which Trenton deems worthy of support. (Pixabay)

The bills (A646/S2079) would increase the allocation of revenues from the hotel and motel occupancy fee towards arts, historical heritage, and tourism purposes from 40 percent to 100 percent. This change would allow counties like Cape May, Ocean, Monmouth and Atlantic to retain more of their tourism dollars for improving infrastructure critical to keeping tourists coming to the Jersey Shore.

In Cape May County for example, hotel and occupancy taxes raised nearly $16.3 million in 2021 but the county only received $1.05 million back in Fiscal Year 2022 Arts and History Grants. By comparison, Essex County only generated about $4.2 million in the same taxes but received $8 million in grants funding according to figures from the state Department of Treasury.

“Right here in Cape May County, tourism taxes raised about $660 million in 2021, but the county is consistently shortchanged by Trenton in financial assistance for tourism purposes,” said Sen. Michael Testa (R-Vineland). “Meanwhile, larger counties in the north get more grants than their taxes generate. That inequality makes no sense and puts most of our Shore counties on the hook for propping up other less successful counties.”

According to statistics provided by Treasury, Cape May and Bergen Counties received less than the 7.3% average return from their occupancy tax in Arts and Historic Grants from the state while counties like Essex, Cumberland and Salem received well more than 125% of those grants from their occupancy taxes.

“We want to help every county in the state to improve their attractiveness to visitors and show what they have to offer, but we can’t justify this inequitable status quo any longer,” said Assemblyman Antwan McClellan. “The Shore regions should not have to carry the burden for other less successful counties.”

The trio introduced the Tourism Tax Fair Share Act first in 2021 with an eye to allowing towns and counties to keep more of the tax dollars their efforts and those of their hospitality and tourism attractions raise from visitors. The numbers found in the Treasury only underscore the need for reform.

“If counties like Cape May could keep even 25% of the tourism tax dollars it generated, that means an additional $165 million a year for better roads and bridges, increased investment in our aging infrastructure and the opportunity to build and innovate for future success,” said Assemblyman Erik Simonsen (R-Lower).

By law, $55 million of the $130 million collected in occupancy taxes in 2021 goes to fund Tourism, Arts, and History. Of that total, tourism only received $17.6 million, while the arts received $31.9 million and historic sites received $5.5 million. The fact that the tourism industry—which generates the occupancy tax on hotel and motel stays—is funded at a lower level raises additional questions. Moreover, the remaining occupancy tax—approximately $75 million—remains unused to support these efforts.

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