Voters approve tourist 'bed tax' district expansion. What does this mean for Okaloosa?
Okaloosa County’s tourist development tax or “bed tax” district will become a countywide one early next year.
In the county’s mail-in referendum that ended Tuesday night, more than 65% of voters approved enlarging the district to encompass the entire county, according to unofficial results from the county Supervisor of Elections Office.
The question had needed only simple majority approval, or 50% plus one vote, to pass. Only voters who live outside the existing bed tax district were eligible to vote.
The existing 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.
Now, with voters’ approval secured, Niceville, Valparaiso, Crestview, Shalimar, Laurel Hill, the rest of Fort Walton Beach and Mary Esther and more unincorporated areas will join the district.
Expenses of the county Tourist Development Council are funded by the 5% bed tax paid by people staying overnight at lodgings in the district.
In recent years, the district has generated from $18 million to more than $23 million per year, with most of the money used to promote the area to tourists and fund beach safety and beach improvements.
The county will start charging and collecting a bed tax in the district’s expansion area on March 1, 2022.
A 4% bed tax will be charged in the expansion area until March 1, 2025, when an additional 1% will be added to equal the 5% already charged in the existing district.
The expansion area has almost 3,000 lodging units. It could generate an annual total of $2 million to $3 million in additional bed tax revenue that could help pay for tourism-related amenities and activities, environmental improvements and other items.
“Tourism tax has been collected on overnight stays in the south end of the county for decades,” County Commission Chairman Carolyn Ketchel said Wednesday. “Time has shown that the entire county feels the effects of tourism so the moment was right to let the voters decide on expanding countywide. We’re looking forward to this bright new opportunity for our residents and guests of Okaloosa County.”
The commission recently approved having the county Clerk of Court instead of the state Department of Revenue (DOR) collect the bed tax revenue.
While the DOR for years collected the revenue at no charge to the county, the state department did not track from which lodging establishments the revenue was generated. The last time county staff members tracked local collections, in 2017, they found that Destin had produced more than 60% of that year’s total bed tax revenue.
In addition to collecting the revenue from the countywide district, the Clerk of Court will keep track of where it was produced. These and other related duties are expected to cost the county about $500,000 per year.
Ketchel noted that the county’s municipalities favor the use of the “in-house” collection method.
“This helps us continue the spirit of cooperation between the county and its municipalities,” she said.
The use of the local collection method also should allow the county to receive data on where tourists are coming from. That information will help with the Tourist Development Department’s marketing efforts, Deputy County Administrator of Operations Craig Coffey said recently.