Southern Delaware Tourism, chambers cry foul over proposed funding cut


SUSSEX COUNTY — In reaction to proposed spending cuts to reduce the state’s projected $380 million shortfall, tourism officials in southern Delaware are readying for a fight to preserve their funding.

“We are fighting to state our case to our legislators, the Joint Finance Committee and powers that be that we understand the state is in a severe budget crisis right now. We get that. We want to be part of that solution,” said Scott Thomas, Southern Delaware Tourism’s executive director. “We feel this is going to make it worse because we are a revenue generator. We help offset residential tax burden.”

Earlier this month, the Joint Finance Committee cut funding to Southern Delaware Tourism — Sussex County’s convention and visitors bureau — by 100 percent, effectively shutting it down as of June 30 if legislators do not take action to restore funding in the session’s final days. By law, the General Assembly must have a budget in place when it adjourns next week.

Southern Delaware Tourism (SDT) in concert with nine chambers of commerce in Sussex County and convention and visitors’ bureaus from Kent and New Castle counties assist in bringing in more than $4 billion annually to the state in visitor spending.

More than $1.7 billion is spent in Sussex County, according to Mr. Thomas.

SDT’s funding is administered through the 8 percent State Public Accommodations Tax receipt (hotel tax) formula imposed on visitors. Five of the 8 percent currently goes to the state’s general fund, with 1 percent each going to the three convention and visitors bureaus, the state tourism office and the beach replenishment fund.

The JFC’s proposal is to shift the 1 percent earmarked for the convention & visitors bureaus to the general fund, essentially eliminating funding for Southern Delaware Tourism and other CVBs.

“So, it’s not being reinvested back into tourism which of course generates a lot of returns in tax receipts. It actually grows the general fund so it can be used to pay for all these other state programs,” said Mr. Thomas. “Our whole message is that this a revenue generator driven by out-of-area visitors by this hotel tax. You need to keep reinvesting and promoting what we have here to keep that on the uptick.”

The JFC’s move eliminates a $1 million investment in SDT marketing programs, services and events. That includes a $590,000 investment in tourism programs and services administered by nine local chambers of commerce in the county.

Concerns among chamber of commerce leaders range from loss of revenue for programs and marketing to loss of jobs and chamber membership.

“The funds we receive from Southern Delaware Tourism comes to over a third of our budget. If that 1 percent is actually taken away, which constitutes 100-percent of the funding to Southern Delaware Tourism, it’s going to result in possible dues increase and reduction of programs that the chamber can offer,” said Greater Georgetown Chamber of Commerce President Angela Emerson. “Our Wings & Wheels festival is our key festival. We bring in over 10,000 people. Wings & Wheels, it could definitely be affected.”

“And jobs could be lost and possibly chambers could be at risk, especially some of our smaller chambers,” said Ms. Emerson.

If funding is eliminated, Mr. Thomas estimates the employment impact will be 16 to 20 jobs “right off the top.”

“Members may not like it if their membership dues get raised,” said Greater Millsboro Chamber of Commerce Executive Director Amy Simmons. “I think if we raised our dues we would lose members.”

Ms. Simmons said the Millsboro chamber would be negatively impacted but not to the degree as some others.

“We get a very small percentage of that money. But it will impact Millsboro chamber by maybe 25 percent of our income, because part of that money can go toward the director’s salary. But we also use the other 75 percent on advertising or promotion of the area to bring people in,” said Ms. Simmons. “Without that money, yes, we will be able to continue with our events but we will not be advertising as heavily because we just don’t have that money, which is going to trickle down the economic ladder. It’s a vicious cycle.”

“We’re one of the smaller chambers. The beach chambers are much more heavily impacted by this. But we are all going to be hurt,” said Ms. Simmons. “And there is a lot of employment through tourism.”

Noting that agriculture and tourism are Sussex County’s two biggest industries, Mr. Thomas says that investment in tourism yields a substantial return on investment. For every dollar the state invests in tourism, the state receives $2.75 in tax revenue.

“That’s a pretty good return on investment,” said Mr. Thomas. “There is a lot of detrimental repercussions that trickle down from this. It’s just moving in the wrong direction.”

Additionally, SDT generates revenue for the Greater Georgetown Chamber through rental of second-floor office space in the chamber’s headquarters on Route 9.

Mr. Thomas has spent a lot of time in Dover the past two weeks in the campaign to plead tourism leaders’ case in hopes funding will be reinstated. Legislators have for the most part been receptive, he said.

“I think they get it. We certainly get that they are in a crisis,” said Mr. Thomas. “We’re trying to keep our message simple. It’s not just us. It’s all of our tourism partners. We’re casting the net to get these visitors here. And this is our funding mechanism.”

“If you divest, it becomes stagnant, the marketing goes away, visitation drops – and other states have learned this the hard way,” said Mr. Thomas, pointing to Colorado. “They said, ‘We’re not going to promote ourselves’ and they suffered. There are case studies across the board.”

“We are trying not only to protect but show the state that this is not a good move, even in the short term,” said Mr. Thomas. “Obviously, we are very concerned. But we feel pretty good about what we are doing. I’ll certainly feel better when this is reinstated. I’d be feeling better if it wasn’t taken out in the first place.”

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