Idaho’s state Department of Commerce is seeing strong growth in revenues from lodging taxes, so its budget request for next year includes an additional $3.5 million for tourism promotion, to spend the additional money that’s coming in. Those lodging tax funds usually are divided 45 percent to local grants and 45 percent to state tourism promotions efforts, with 10 percent going to Commerce Department overhead. But state Commerce Director Megan Ronk said for next year, the department won’t tap that 10 percent, instead putting 55 percent into more tourism promotion at the state level.
“The growth has been very strong and has surpassed expectations over the past few years,” Ronk told the Joint Finance-Appropriations Committee this morning. In fiscal year 2014, the state’s 2 percent lodging taxes were expected to grow by 7 percent; they grew 8.1 percent. In 2015, they grew 8.6 percent. And in fiscal year 2016, they grew more than 13 percent.
“As of December 2016 we were up, year over year, 11.88 percent, so that growth trend continues,” Ronk said. Her budget anticipates continued growth in those tax revenues over the next three years, as 1,800 new hotel rooms open across the state.
Gov. Butch Otter also is calling for a $3 million infusion from the general fund into the department’s Opportunity Fund, which is used to offset public infrastructure costs for cities and counties related to companies recruited to Idaho. The fund already has a $3 million appropriation, but all but $540,000 of that is committed to projects. Ronk said without additional funds, in the coming year the department would have “a great tool with no funding to award to future projects.” She said examples of projects that have triggered grants from the fund include the GoGo squeeZ plant in Nampa, Fabri Kal in Burley, and P.Kay Metal in Lewiston, a metal manufacturing firm that supports the state’s growing gun and ammunition industry.
The Opportunity Fund was created by the Legislature in 2006 to make funds available to the state commerce director to offset costs to cities and counties associated with new businesses recruited to come in.
Sen. Mary Souza, R-Coeur d’Alene, asked Ronk, “Now that you’re bringing in these large companies … what is the department planning to do for existing small businesses in Idaho?”
Ronk said, “One thing I would like to point out is that first of all, all of our incentives, whether the tax reimbursement incentive or Idaho Opportunity Fund or our federal block grants, are all available to both existing Idaho companies as well as any new companies coming to the state. So from my perspective we have a very level playing field.” She said, “To further enhance that effort as part of my new role as director and some internal shuffling that I’ve made … we in October … just appointed a new business retention and expansion team. While business retention and expansion has always been a focus of the department, and we have members of our team that work with existing Idaho companies, I felt it was particularly important.”
Now, she said, the department has a four-member team whose “sole responsibility” is to work with existing Idaho businesses to find out their needs and help them succeed and expand.
Overall, the governor’s recommendation for the Commerce budget for next year shows a 0.3 percent increase in state general funds, but a 9.8 percent increase in total funds, largely because of a 24.8 percent increase in dedicated funds, including the lodging tax revenues.