Dear Editorial Page Editor:
As the negotiations ramp up on the fifth coronavirus relief package, there are numerous policy proposals for how to address this crisis and help communities to rebound quickly, and the competing interests often make it difficult for the average citizen to understand the policies most likely to positively impact our community. I would like to urge the editorial board to weigh in on the importance of direct and flexible assistance to state and local governments and the central role that tourism can play in helping communities to navigate this crisis.
Travel & tourism is a powerful engine of economic growth for communities large and small across the Southeast and the nation. According to the U.S. Travel Association, travelers spent $1.1 trillion in spending, generating $2.6 trillion in economic output and supported 15.8 million American jobs in 2019. The thirteen states and District of Columbia that make up the Southeast Tourism Society (STS) generated an estimated $291 billion of spending, supporting 2.7 million jobs and generated over $44 billion of federal, state and local taxes. In 2018, Georgia’s total tourism impact was $66.3 billion including domestic and international travelers to Georgia spending $36.9 billion, supporting 478,000 jobs, and generating state and local tax revenues of $3.4 billion.
Despite its strength, tourism has been decimated by the COVID-19 pandemic and the resulting shutdown of American life. Nationally, Oxford Economics estimate that travel will decline by 45% annually in 2020, and industry losses will reach $519 billion. The impact to communities will be devastating as the decline in travel is expected to result in a loss of $80 billion in federal, state, and local taxes. Both local governments and convention & visitors bureaus (CVBs) depend on travel taxes to fund their essential operations. This unexpected loss of funding means that tourism may not be fully
leveraged as a driver of economic recovery. No other economic sector can match tourism’s ability to quickly reengage businesses and put employees back to work. Tourism plays an essential role in supporting a community’s diverse range of businesses.
Although the recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated
$150 billion for state and local governments to offset tax revenue from falling business activity, the Treasury Department issued tight limits on the funds, requiring that they only be used for costs directly tied to the coronavirus that governments did not anticipate in their most recent budget. This is contrary to the intention of Congress, which recognized that the serious revenue loss by state and local governments is coronavirus related and the emergency funding in the CARES Act should fill that gap.
In the face of this unprecedented crisis, we recognize that recovery does not just happen. Restaurants, hotels and attractions can re-open, but without the support of CVBs to drive visitors to those businesses they will not rebound. Unfortunately, most CVBs are not eligible for the CARES Act relief programs afforded to small businesses or IRS designated charitable non-profits, most notably the Paycheck Protection Program. The CVBs in most states are structured as quasi-governmental entities. Designated by the state legislature, funded through dedicated hotel and/or restaurant taxes, they follow strict governmental accounting policies and procedures. This special status means that they are not directly part of government and the IRS does not classify them as non-profits. There are other CVBs that are organized as non-profits under Section 501(c)(6) of the IRS Code (business leagues, chambers of
commerce, and boards of trade) and are not eligible for the Paycheck Protection Program as only 501(c)(3) and 501(c)(19) organizations are designated.
We are also looking to utilize every potential resource to help our communities rebound. In previous disasters, states and municipalities have utilized Community Development Block Grants (CDBG) for the purpose of post-disaster tourism promotion after receiving a waiver from the Department of Housing and Urban Development. Designating a portion of the CARES Act CDBG funds specifically for tourism will cut the red tape and allow our state’s CVBs to quickly deploy this funding to drive renewed visitation and visitor spending.
In summary, we are looking at three policy proposals to support our communities and to ensure that tourism can reach its full potential as a driver of recovery:
1. Include another round of emergency funding for state and local governments in the next coronavirus relief package and ensure that the rules are flexible to allow every community to directly address its unique impacts from the crisis.
2. Amend the CARES Act to ensure the full spectrum of tourism offices, including 501(c) organizations and tourism-related quasi-governmental entities are eligible under the Small Business Administration’s Paycheck Protection Program.
3. Direct relief directly to state governments in the form of Community Development Block Grants (CDBG) to be distributed exclusively to official tourism commissions/convention and visitors bureaus (CVB)/Destination Marketing Organizations (DMO) for the express purpose of tourism development and promotion.
Thank you for your time and please contact us if you have any questions.
Monica Smith, CMP, CASE, CDME Jay Markwalter, LEC, TMP
President & CEO Executive Director
Southeast Tourism Society Georgia Association of Convention & Visitor Bureau
Office Phone: 770-542-1523 Office Phone: 912-897-6339