Whoever said taxes don’t go down?
In late June, Duplin County agreed to cut its room tax from 6% to 4.5%, which will reduce collections to less than $200,000 annually. Under a state law applicable to the eastern N.C. county, that enabled its commission to dissolve the Duplin County Tourism Development Authority.
Room tax collections and tourism promotion are now directed by the county government, which is led by Manager Bryan Miller and Assistant County Manager Carrie Shields.
The decision led to dismissing the TDA’s two employees, which Miller said would save more than $100,000, the Duplin Journal reported in July.
He didn’t explain what prompted the change, and couldn’t be reached for comment Monday.
But it’s the latest example of apparent friction between county governments and tourism agencies, which is becoming more common statewide, says Chris Cavanaugh, owner of Magellan Strategy Group in Asheville. He’s a leading expert on N.C. travel and tourism.
Lodging tax collections in North Carolina topped $450 million last year, compared with about $89 million in 2002, Cavanaugh says. That reflects the state’s increased popularity for tourists and businesspeople, and the rising prices of hotel rooms.
Lodging tax revenue is supposed to be used solely for tourism-related purposes, such as advertising and improvements to event centers. But there’s lots of debate over the definition of tourism projects, and some county officials want to use the lodging tax revenue in ways opposed by hotel owners and others.
Such conflict has sparked various disputes, most notably in Currituck County. Property owners there filed a lawsuit in 2019 alleging that the county government had misspent more than $40 million that should have been used for beach nourishment and other tourism projects. Last year, the N.C. Appeals Court ruled in the property owners’ favor, overturning an original lower-court decision. The N.C. Supreme Court has agreed to hear the county’s appeal this summer.
In Currituck County, the county board acts as the tourism development authority, which is not typical in most N.C. counties.
“There’s a lot more tourism money that is involved now than there used to be, so it attracts a lot more attention,” Cavanaugh says. Local governments seeking to fill budget holes and replace COVID-era grants naturally are watching the increasing revenue secured through hotel taxes, he adds.
Duplin County, with a population of about 50,000, is better known for agriculture than visitors. But it has such tourism spots as the Murphy family’s 36-hole River Landing golf course development; the world’s largest Muscadine grape winery, Duplin Winery; and the world’s largest frying pan, in Rose Hill.
Most N.C. counties charge the maximum hotel tax permitted by the state, 6%. “It’s unheard of for a county to lower the rate,” Cavanaugh says.
The former Duplin TDA director, Robert Cox, has since joined Fayetteville’s tourism group, DistiNCtly Fayetteville.
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.