Jonathan Schechter Corpus Callosum Column Jackson Hole News&Guide October 20, 2010

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1 Jonaan Schechter Corpus Callosum Column Jackson Hole News&Guide October 20, 2010 What is hateful to yself do not do to anoer. That is e whole Law, e re is Commentary. Rabbi Hillel As I see it, e lodging tax is a queion of fai. Two queions, actually: A joint powers board will control e bulk of e lodging tax funds. Do I have fai at e town council and county commissioners will appoint forward-looking people to at board? Do I have fai at ose individuals will use e lodging tax proceeds to catalyze Jackson Hole into tourism s 21 century? In bo cases, I ve concluded yes. As a result, I m voting for e lodging tax. I m doing so because I believe at, if used properly, e lodging tax proceeds hold e potential to bring about two very important results: allow Jackson Hole to move beyond its current 20 century approach toward tourism and, in its place, create an innovative 21 century approach, one at can become e andard for e world; and alter e current situation so at, inead of viewed as being at odds wi one oer, tourism and e community s overall values are closely aligned. Wheer is promise can be fulfilled isn t clear. But in my view, e potential upside is so very high at e measure is wor trying. Similarly, e potential downsides of passing e lodging tax (e.g. additional crowding, overtaxing our infraructure, and e like) is relatively small. As a result, I m willing to make a leap of fai and vote yes. And if my fai is betrayed if e lodging tax s proceeds are used to simply re-enforce e atus quo inead of catalyze e future en I ll vote again its re-auorization four years from now. So at s what I m doing. Tipping my hat to Rabbi Hillel, e re of is column is commentary. The Lodging Tax s mechanics There are five fundamentals to e lodging tax. 1. If enacted, a two percent tax will be added to all transient lodging. This includes hotels, motels, short-term condos, dude ranches, and e like. 2. If enacted, e tax will go into effect on January 1, 2011, and be in place for four years. In November 2014, voters will be asked to re-auorize it. If ey do not, it will op being levied on December 31, percent of e tax proceeds mu be used to promote e Jackson Hole area. 30 percent may be used to pay for visitor impact services such as e START bus, and e remaining 10 percent goes into local government s general fund. 4. Had e lodging tax been in place during e fiscal year ending June 30, 2010, it would have raised an eimated $3.5 million: $2.1 million for promotion; $1.05 million for visitor impact services, and $350,000 for general government operations. 5. If enacted, decisions on how to spend e 30 and 10 percent portions of e lodging tax will be made by e town council and county commission. A joint powers board appointed by e council and commissioners will decide how to spend e 60 percent portion. A majority of e joint powers board s members mu work in e tourism indury. Copyright 2010 Jonaan Schechter All rights reserved. This document is intended solely for private educational use by individuals. All oer uses and forms of reproduction are rictly prohibited wiout prior express written permission from Jonaan Schechter (js@charture.org or (307) )

2 Much of e confusion surrounding e lodging tax ems from e fact at it has two facets: It will put more money into funding local government, and it will create a new source of funding for promoting e valley. As evidenced by e recent SPET elections, voters favor putting more money into local government and related services. I m guessing is willingness to fund local government holds especially true when it s someone else s money, for almo all of e lodging tax will be paid by touris. However, as evidenced by e lodging tax s failure e la ree times it was on e ballot, increasing promotion is much more controversial. Money for local government Let s look fir at e government facet of e lodging tax. In e context of local government expenditures, e $350,000 which would go into local government coffers doesn t amount to much, around 1 percent of is year s combined operating budgets for e town and county, and around 7 percent of e amount e town and county whacked from eir collective FY 2010 budgets. But is $350,000 can be booed if part of e lodging tax proceeds are used to offset money e town and county currently spend to support visitor-related services. How much might be available? All of e 30 percent could go toward offsetting money currently spent on START operations, paways maintenance, and oer related activities. In addition, part of e 60 percent could offset e money currently given to e Chamber of Commerce for its operations, adding anoer $300,000 to e mix. (Table 1) Add ese sources togeer, and e lodging tax could generate as much as $2,000,000 for local government to spend elsewhere. (Table 2) This isn t a ton of money only around 6 percent of e combined county and town budgets for is year, or 40 percent of what ey had to cut from la year s budgets. However, it s better an noing. Wheer it s $350,000, $2 million, or someing in-between, e important queion is: How will at additional revenue be spent? Basically, proponents are asking voters to tru e government to spend it wisely, a lot to ask in such a virulently anti-government election year. Because of at tru issue, I ink e tax s proponents in local government made a tactical miake by not giving voters a sense of what ey might do wi e money should e lodging tax pass. They also made a miake in not giving voters a sense of what criteria ey would use to select joint powers board officials, for ose are e folks who will decide how to spend e 60 percent (including money e electeds hope will go to funding e Chamber s visitor services efforts). Had ose two issues been addressed, it would have gone some diance toward addressing e tru issue. But ey weren t, so voters have to decide wheer local government can be trued to be good ewards of is new revenue, and to appoint oughtful people to e joint powers board. In my view, local government has earned is tru, so I m relatively sanguine about e governmental facet of e lodging tax. Money for promotion This is e trickier facet, for underlying it are ree linked assumptions: 1. More money for promotion will result in more and/or better touris, 2. More and/or better touris will result in a ronger tourism economy. 3. A ronger tourism economy will benefit e entire community. In my la column, I addressed e second assumption, and on is e data are clear: Wi e Copyright 2010 Jonaan Schechter All rights reserved. This document is intended solely for private educational use by individuals. All oer uses and forms of reproduction are rictly prohibited wiout prior express written permission from Jonaan Schechter (js@charture.org or (307) )

3 exception of skier days and e winter economy, ere s no atiically-significant link between e total number of touris visiting Jackson Hole and our taxable sales. Or population grow. Or traffic. Or any oer grow-related measure. This finding may or may not be true for individual businesses, but it s unarguably true for e overall community. The ird assumption proved to be e Achilles heel of e lodging tax e la ree times it was brought to a vote. A majority of voters didn t see how improving e tourism economy would improve eir own lives, so ey voted it down. And given at our economy has become even less dependent on tourism during e la 15 years, I m sure at disconnect remains. For example, improving e tourism economy won t improve our clearly-suffering building trades. Nor will it necessarily make life better for ose reliant on invement income. Overcoming is disconnect is a big challenge for lodging tax proponents. Making ings easier for em is e fact at one of e big arguments from e la election at tourism promotion leads to rapid population grow has been shown to be untrue. However, because e va majority of Teton County s economy is, at be, only indirectly linked to tourism, mo residents will not see a clear cause-and-effect improvement in eir lives if e tourism economy improves. This reality is a fertile medium for ose opposing e tax, particularly ose arguing at more touris will lead to more crowds and an overall degradation of our quality of life. I have a problem wi at argument, ough, for e simple reality is at ings can t get too much more crowded in e summer. In addition, we certainly have e capacity to handle more touris during e non-summer mons. Similarly, I disagree wi ose who argue at if we vote down e tax, we can en go to e Wyoming Legislature and say change e law to allow us to spend e entire lodging tax as we see fit. To me, at approach will never succeed, for one need not be a connoisseur of hypocrisy to appreciate at e same legislators who scream at e feds should give em more local control are utterly unwilling to cede any power to cities and counties. So e queion facing voters is wheer to support e half-a-loaf solution at is e current tax realiically, it s ju not going to get any better. Wreling wi at led me to queion e fir of e ree assumptions: Will additional promotional dollars actually produce more touris? According to my research, e answer is depends. There are two reasons for is. Fir, $2 million is not a lot of money to spend on promotion. For example, according to a recent News&Guide article, e Terra Resort Group alone spends $1.3 million annually on marketing ju its ree hotels. So while $2 million sounds like a lot to you and me, in e marketing world, it ain t necessarily so. Second, even if we do spend $2 million on promotion, ere s no guarantee of results. We could spend at money and get more touris and/or higher-spending touris. Or we could see very little difference. There s no way to predict. This is because e key to a successful campaign promoting Jackson Hole will be how at money is spent, which in turn will be a function of two ings: who is on e joint powers board, and what ey try to accomplish. Who is on e joint powers board is e lesser concern, for even if certain members are disaers, ey can be replaced when eir terms expire. Here again, ough, It would be have been helpful had e electeds given voters a pre-election sense of what eir selection criteria would be. Far, far more important is what e joint powers board is trying to accomplish. This is e real crux of e issue, and if e lodging tax is defeated, it will be because proponents never provided a satisfactory explanation of what it is ey want to promote, how ey plan to do it, or why it s Copyright 2010 Jonaan Schechter All rights reserved. This document is intended solely for private educational use by individuals. All oer uses and forms of reproduction are rictly prohibited wiout prior express written permission from Jonaan Schechter (js@charture.org or (307) )

4 important. Marketing professionals I ve spoken wi are clear at, in order to succeed, a promotional effort mu be part of a larger rategic plan. If it s not, you re essentially rowing money away, especially because ere ll be no andard again which to measure e success of e promotional effort. However, as far as I know, no rategic plan exis for marketing Jackson Hole. For individual resorts, seasons, or properties, yes. But for e valley as a whole, no. Yet at s exactly what e lodging tax proceeds are intended be used for: to promote Jackson Hole. However, not only is ere is no rategy for promoting Jackson Hole, ere hasn t been any discussion of one. As a result, e lodging tax has become a Rorschach blot, a pool of money on which one person or intere group res eir fonde hopes, while anoer sees eir deepe fears. If e tax passes, e community will have $1.5 million or more each year to spend on promoting ourselves. But looming out ere is e queion of what we will be promoting. And alough ey ve not said it is way, my sense is e opponents greate fear is at we ll simply spend e money to do more of e same, namely bringing even more touris here. And while at might improve e fortunes of individual business owners, opponents would argue at it won t do much for e community as a whole, likely hurting us more an it would help. And wiout a clear rategic plan, ey might ju be right. Let s call e opponents fear e 20 century view of tourism, one in which some businesses clearly win, some individuals clearly lose, and wheer e community as a whole wins or loses depends on your ake in e tourism economy. But I ink ere s anoer way of viewing what e lodging tax might do for us. From is perspective call it 21 century tourism e promotional money can serve to catalyze us to pursue an economy which is not e win-lose of e 20 century model, but one which more directly connects Jackson Hole s tourism indury wi e community s overall values. In is conruct, 20 century tourism emphasizes quantity over quality. Bringing in more touris puts money into e pockets of ose in e tourism indury, but only indirectly benefits e re of e community. What if, however, we could focus on quality raer an quantity? What if e community dog could wag e tourism tail? This is e 21 century model of tourism, and while no resort community has fully developed it, no place is better suited to bring it to fruition an Jackson Hole. This leads into e real opportunity at hand: Setting e international andard for e future of tourism. 21 century tourism will be rooted in eco-tourism of course, but will extend to involve all aspects of e community, creating a situation where tourism and e local quality of life complement each anoer inead of being at odds. How might 21 century tourism work? As I say, no one s figured it out yet, but here s an example of how it would differ from e 20 century model. Currently, planes flying in and out of e Jackson Hole airport wheer commercial or private create damage wiout paying for it. This is because eir noise disrupts e national park experience, and eir greenhouse gasses contribute to e many global-warming related problems facing our national parks and fores. The 20 century tourism approach to is problem is for Jackson Hole to simply accept e damage, and hope it will somehow be offset however indirectly by tourism s economic benefits. This trade-off mentality is so deeply ingrained at it s not even queioned by any of e ree bodies wi power to address it: Grand Teton National Park, e airport board, or e elected officials who appoint airport board Copyright 2010 Jonaan Schechter All rights reserved. This document is intended solely for private educational use by individuals. All oer uses and forms of reproduction are rictly prohibited wiout prior express written permission from Jonaan Schechter (js@charture.org or (307) )

5 members. Inead, all are implicitly content to accept at noise pollution and adding to global warming are part of e price of promoting e valley s tourism economy. A 21 century approach would be to say we don t have to trade off environmental heal for economic heal. True, short of closing e airport, ere s not much we can do about airplane noise pollution we need to look to plane manufacturers and federal regulations for at. But what we can do is require every plane flying into or out of e Jackson Hole airport to offset at lea 100 percent of its carbon emissions. Conceptually, requiring offsets is no different an e lodging tax: cuomers pay a fee, e proceeds from which are earmarked for a particular purpose. Furer, e co of an offset is similarly small: one to two percent of e overall co. But e benefits of offsetting all flights would be far greater an anying possible rough e lodging tax, because if we hurried up and enacted e idea, we could lay claim to being e world s fir carbonneutral airport. This, in turn, would create ree huge benefits: p.r. value far greater an any publicity we could buy; a clear message to every person flying here (including e world s finance miniers every Augu) at environmental ewardship is integral to Jackson Hole; and eablishing a model for similar community programs. By doing is, we d not ju continue to enjoy e economic benefits resulting from our air service, but enjoy em in a way at enhanced e environmental heal critical to e long-term heal of our tourism economy. We d also take e fir ep toward coming up wi a Jackson Hole andard, a meod by which resort communities worldwide could assess emselves. And wi at, we d also be laying e foundation for a rategic economic plan for Jackson Hole, one which would make e mission of e joint powers board cryal clear: promote e fact at Jackson Hole offers a remarkable experience to its visitors because it offers a remarkable experience to its residents. So for me, is is e opportunity presented by e lodging tax it can become e cataly to help us ink rategically about e future of not ju our economy, but how we can more closely integrate our economy wi e community s overall values. In a certain sense, is is what we re trying to do wi land use and e comprehensive plan; arguably, having an economic rategy is at lea as important to e community s future as having a land use rategy. So I ll vote yes on e lodging tax, on e hope at e moral obligation to wisely spend millions each year on promotion will force us to finally take a pro-active approach to our economic future. And while ere s clearly a chance we ll squander e opportunity, I don t see anying else out ere which holds a similar potential to galvanize our inking. Oerwise we ll ju continue to be reactive and, if we do, miss a golden opportunity to become e world s leader in linking our tourism to e broade measures of community vitality. And if we simply use e lodging tax to promote tourism as usual? Well, we can always vote e tax down again in four years. But to me, e upside of having a $2 million annual cataly to help propel us into e future easily trumps e risk of spending a relatively mode amount to preserve e pa. After all e time I ve spent inking about e issue, I certainly I hope I m right. Copyright 2010 Jonaan Schechter All rights reserved. This document is intended solely for private educational use by individuals. All oer uses and forms of reproduction are rictly prohibited wiout prior express written permission from Jonaan Schechter (js@charture.org or (307) )

6 Table 1 Local Government Expenditures That Could Be Offset By Lodging Tax Proceeds Amount spend by local government on: FY 2009 FY 2010 FY 2011 START operations $820,000 $400,000 $400,000 Paways $130,000 $132,000 $118,000 Chamber of Commerce $413,000 $384,000 $327,000 Total $1,363,000 $916,000 $845,000 Table 2 Possible Allocations of Lodging Tax (Based on WY Dept. of Revenue eimate at a 2 percent lodging tax would have raised $3.5 million in FY 2010) Use Amount (sub-total) Amount (total) % of $3.5 million total Notes 10% for local government general fund $350,000 10% START operations $800,000 23% Reore to 2009 level 30% for visitor-impact services, including... Paways operations & maintenance $250,000 7% Provide for operations + high level of routine maintenance Sub-total $1,050,000 $1,050,000 30% Offset local government support for Chamber of Commerce $400,000 11% Reore to 2009 level 60% for promotion, of which... Promote alternative transportation $100,000 3% Encourage START ridership & paway use Oer $1,600,000 46% Spend on 21 century promotion Sub-total $2,100,000 $2,100,000 60% Total $3,500, % Copyright 2010 Jonaan Schechter All rights reserved. This document is intended solely for private educational use by individuals. All oer uses and forms of reproduction are rictly prohibited wiout prior express written permission from Jonaan Schechter (js@charture.org or (307) )

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