Florida officials find Escambia County misused tourism tax funds

By Andrew Powell | The Center Square contributor Feb 16, 2023
Navarre Beach in Escambia County, Florida.
Navarre Beach in Escambia County, Florida. Facebook / Escambia County

(The Center Square) — A recent report from the Florida Auditor General has turned up three issues regarding the use of taxes retained by the Escambia County Board of County Commissioners and Clerk of the Circuit Court and Comptroller.

Florida state law allows counties to levy and impose five separate local option taxes, referred to as the Tourist Development Tax, which allows rates of up to 6% of each dollar collected from short-term rentals of up to six months.

The funds are only allowed to be collected and used for the purposes of tourism and the use of funds for anything not specified is prohibited.

In the report summary, it stated that the Escambia County commissioners and Clerk had used TDT revenues contrary to state law, specifically, the amount that the county could retain for administration costs.

According to the report, the commissioners adopted an ordinance for the collection and administration of TDT by the county. The ordinance further provides the county with a 3% cut from all TDT collected for administration costs which is the maximum allowed under state law.

The issue is that the county had retained the entire 3% and had collected, retained and allocated funds to the clerk for administering them, even if the administration costs were not 3%. This is contrary to the intent of state law, according to the report.

The second issue was the commissioners had not reviewed a report from the Escambia County Tourist Development Council regarding unauthorized expenditures. The TDC is required under state law to continuously review TDT expenditures.

April of 2021, the TDC had sent a letter to the county commission and the Florida Department of Revenue detailing expenditures they believed to be unauthorized, pertaining to the administrative costs of both the clerk and the BCC.

The matter was referred to the Auditor General and it was found that the county commission had not reviewed the questioned expenditures, nor did the BCC take appropriate action to ensure they were compliant with state law.

The third issue, the report stated, "Our examination disclosed that BCC records did not always adequately demonstrate that the expenditures of TDT collections were based on a determination that the related activity directly and primarily promoted tourism and were for the TDT purposes specified by state law."

Between October 2020 through to December 2021, TDT collections which totaled $287,265 were expended on salaries, benefits and operating costs of the BCC’s Marine Resources Division. The Division is responsible to the maintenance and beautification of local reefs, shorelines and county boat ramps.

According to the report, the county said that they were able to use the funds because the Division operates as a small part of the tourism industry. However, the report states that the BCC and Clerk had not adequately proven that those funds were used specifically for tourism.

Other questioned expenditures included the purchase of five all-terrain vehicles at a cost of $73,936.

Despite being allowed to purchase ATVs with TDT, the Auditor General found that the ATV’s were given to the Pensacola Beach Public Works Department and pointed out that to be compliant with state law, they must be primarily used for tourism.

Corrective actions required by the Auditor General include clarifying costs collected for TDT administration does not exceed 3% of collections and not automatically retaining that amount.

The BCC has also been ordered to comply with state law by taking proper judicial actions when expenditures are questioned by the DOR or TDC.

Finally, the BCC should also adopt policies and procedures to ensure that TDT is used for the sole purpose of tourism and not anything else.

In response, the county commission said it would complete corrective actions within a reasonable timeframe.

"It is understood that Escambia County should expect a follow-up review in eighteen months for an evaluation to determine compliance with these proposed corrective actions. Finally, the County is open to any template policies or language that may facilitate these proposed corrective actions."

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