Bed tax battle: Okaloosa County, cities seek to resolve tax district expansion concerns
CRESTVIEW — Elected officials, lawyers and other leaders from Okaloosa County and some of its municipalities plan to meet in two weeks to try to agree on terms on the effort to expand the county bed tax district countywide.
The joint meeting is set for 8:30 a.m. Aug. 18 at the County Administration Building in Shalimar.
This session will be a “conflict assessment meeting” that the Destin City Council recently put in motion when it agreed to implement an “alternative dispute resolution process.”
Destin officials hope that process, which is provided by state statutes but is not the equivalent of a lawsuit, will help get their concerns about the possible bed tax district expansion resolved.
Among other issues, they want to ensure equitable bed tax funding allocations by having two bed tax districts versus expanding the current one countywide. Destin officials also want Destin voters to be able to vote on the possible district expansion, want the city to have a permanent seat on the county Tourist Development Council and want the county to use a local bed tax collection method rather than continuing to use the state Department of Revenue (DOR).
Officials from Crestview, Fort Walton Beach, Mary Esther, Niceville and Valparaiso plan to join Destin and county officials at the Aug. 18 meeting.
In the county’s planned mail-in only referendum Oct. 5, only voters who live outside the existing bed tax district would be asked whether the district should cover the entire county.
If all goes as planned:Many Okaloosa County voters will decide whether to expand county bed-tax district
The bed tax district was approved in 1989 and encompasses Destin, Cinco Bayou and most of Fort Walton Beach and Mary Esther, as well as unincorporated areas adjacent to Destin and Fort Walton Beach, such as Okaloosa Island.
Expenses of the county TDC are funded by the 5% bed tax paid by people staying overnight at lodgings in the district.
With voters’ simple-majority approval of a countywide district, Niceville, Valparaiso, Crestview, Shalimar, Laurel Hill, the rest of Fort Walton Beach and Mary Esther and more unincorporated areas all would join the district.
In the potential countywide district scenario, county estimates show the current district generating $22.5 million in bed tax revenue annually and the expanded area producing an additional $2 million per year.
Besides setting the Aug. 18 date to discuss bed tax district expansion issues, the commission on Tuesday agreed to have a public hearing Sept. 7 to consider the adoption of an ordinance expanding the bed tax district countywide.
While the ordinance would only take effect with voter approval, it must be approved by the commission before the referendum, according to Deputy County Administrator of Operations Craig Coffey.
If the referendum occurs as planned and a majority of voters approve the expansion, the county would start levying and collecting bed taxes in the expanded area next March.
The ordinance on the district expansion calls for levying a 4% bed tax in the expansion area until March 1, 2025, when an additional 1% would be added to equal the 5% that already is charged in the existing district.
The ordinance, which county officials recently revised from an earlier version, includes a section that states the commission intends to transfer bed tax collection duties from the DOR to the county Clerk of Court starting Feb. 1, 2022.
In general, projects and other items funded by bed tax money are recommended by the TDC and go before the County Commission for final approval. Some of the money is used to reimburse expenses incurred in providing public safety services needed to address impacts related to increased tourism, according to county information.
On Tuesday, the commission approved using bed tax money to reimburse the following public safety expenses: $49,726 to the Sheriff’s Office, $59,602 for lifeguards on Okaloosa Island and $100,675 for lifeguards provided by the Destin Fire Control District in Destin.
Commissioner Nathan Boyles, whose district includes a part of Crestview, pulled that overall item from the consent agenda for discussion before the board unanimously approved it.
A “disproportionate share” of public safety dollars in the agenda item is being spent for the lifeguards in Destin, said Boyles, who added, “We have all of this angst, yet everything we’re doing shows that the (existing bed tax district funding allocation) process does work fine.”
He then suggested possibly putting future, similar bed tax funding allocations for Destin into a bank account until the city’s dispute over the planned district expansion has ended.
Commissioner Mel Ponder, whose district includes Destin, said such comments are uncalled for, and that time is needed for the city and county to work things out.
“I don’t think we need to start going off into our corners” of a boxing ring, Ponder told Boyles.
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