||| BY MATTHEW GILBERT, theORCASONIAN OP-ED REPORTER |||
The San Juan Islands Visitors Bureau (SJIVB) contract is up for renewal at the end of this calendar year, and discussion has centered around the question of whether it should be renewed, if so under what conditions, and if not, how should the county use its lodging tax revenue – historically (and legally) earmarked for tourism promotion. On Tuesday, Brandon Andrews, San Juan Parks and Fairs director, described for the County Council how other counties have handled their “destination marketing” function, featuring a chart that showed the population size of each county and the size of their marketing budgets. Not surprisingly, San Juan’s per capita expenditure dwarfs most others. [See the meeting video here HERE, starting at about the one-hour mark.]
The issue of this renewal has galvanized two long-opposing forces, summarized by the following points of view. The first is represented in a public comment by Orcas Island resident Alexandra Gayek, the second by the Bureau itself in a letter it sent to members as a template for lobbying the Council:
Alexandra Gayek:
I urge you to NOT renew the San Juan Islands Visitors Bureau contract, and NOT replace it . . . with any other mechanism to continue promoting tourism at this time. It is irresponsible to continue to promote tourism under the current conditions. What is responsible and needed is to use lodging tax revenue (and/or make other financial resources available) to measure and mitigate the negative ecological, resource, infrastructure, health, financial and community well-being costs of the high amount of visitation we already experience, establish limits on future visitation, and plan how to enforce those limits BEFORE continuing or making any decision to further promote it.
SJIVB:
My business/non-profit is proud to be a member of the San Juan Islands Visitors Bureau. Their year-round destination marketing and stewardship messaging is very important to sustaining my business/non-profit, year over year, and especially in light of the negative ferry news since last year. Visitor dollars are necessary to my business/non-profit, and we would not be able to survive on residents alone. Their “umbrella” marketing allows the San Juans – and island businesses/non-profits – to be competitive with surrounding destinations and retain market share. My business/non-profit supports cooperative strategic planning between the County and Visitors Bureau to help ensure that tourism is both economically and environmentally sustainable within our island communities. The tourism industry is currently the County’s “bread and butter,” and the Visitors Bureau helps keep small businesses like restaurants and retail shops open for all to enjoy.
During the discussion, Council member Jane Fuller echoed Gayek’s concerns when acknowledging “the volume of correspondence that Council has received (for years) against further promotion,” and that if the county is to commit to a multi-year contract, a portion of available funds should be used for stewardship.
[To that point, Gayek also reported on a discussion she had with State Senator Liz Lovelett about the possibility of revising the state lodging tax law “to allow tax funds to be used to measure and mitigate the environmental impacts of tourism. She was very discouraging about this, saying that there’s a force in other counties … whenever anyone tries to get close to changing that law.”]
Cindy Wolf: “There is clearly a need for some kind of balance . . . Philosophically, how do we strike a balance instead of trying to stimulate year-to-year growth?”
Fuller: “We still don’t have a tourism plan. A lot of work went into the Destination Marketing Plan, but nothing has been decided.”
Andrews felt that the VB had a unique role and structure that would be hard to replace, did not feel the marketing function should be absorbed by the county or re-opened via an RFP (request for proposal), and recommended that the contract should be renewed for a minimum of three years. In the end, as you will see in the recently posted press release, the Council – whose role is to suggest and not decide (a power that resides with the Lodging Tax Advisory Committee) – essentially followed Andrews’ recommendations while endorsing an adjusted fee structure, a focus on supporting the island economy during the shoulder and off-seasons, and the addition of performance metrics. They did strike a reference to “tourist expansion” in the current contract language, although that is hardly consistent with adding an emphasis on off-season promotions.
Data Says . . .?
In the shadows of this ongoing debate lurk some interesting numbers. Not surprisingly, overall lodging tax revenue has steadily declined from the post-pandemic frenzy of 2021. For the Nov. – April period (Q1 and Q2 as tracked by the county assessor – Q3 data won’t be available until the Fall), the three-year decline has been most pronounced on San Juan (approx. 50%), while on Orcas the drop has been much more modest (down 14%). That said, the story (so far) in 2024 compared to last year is quite different: down 16% on Orcas through April and up on both San Juan and Lopez. Dragged down by Orcas, the drop for the county is 8%, even as 2024 ferry traffic has been tracking closely to 2023 numbers (although Labor Day traffic was up 10% from last year).
Sales tax income tells quite a different tale. Despite lodging taxes having declined since 2021, sales tax revenue has steadily gone up: 16.5% overall and 3% compared to the same period last year. [To put these figures into perspective, year-to-date 2024 lodging tax revenue is 12.5% the size of sales tax revenue.] When you put the two together, the combined revenues have gone up 9% from what at the time was a record year for lodging and sales taxes.
If tourist traffic as measured by lodging revenue has declined, what explains the consistent rise in sales tax numbers? The most logical answer is residential growth and everything that goes with it, not least of which is construction activity (though local category tax breakouts aren’t available). There were 898 building permits issued in 2022 (including new residential, remodels, and additions), 594 in 2023, and around 300 so far in 2024.
The latest Comp Plan projection estimates that the population of the county will grow from approximately 17,000 in 2025 to about 19,000 by 2035 – a 12% increase. On Orcas, that number is expected to reach 6,400 in 2035 from 5,800 currently. And while it’s too early to tell if the tourism landscape is reshaping itself around ferry uncertainties and other global forces, one thing is clear: As the number of residents goes up, so too does the number of visitors.
Which Signs to Believe
Is all of this an argument in favor of, or against, the pursuit of more tourist dollars? It seems clear that those concerned with island-wide impacts, both human and non-, shouldn’t put all their grievances on the shoulders of visitors. But with population growth – and overall county revenue – on a steady rise, putting growing pressure on island resources and quality of life, the argument for more visitors doesn’t quite hold water either.
I posed these issues to both Orcas Island candidates seeking a place this Fall on the County Council: Justin Paulsen and Rick Hughes. I had intended to include their thoughts in this piece, but their responses were substantial, and will be the subject of Part 2 . . .
Thank you, Mathew, for a sane and sober point of view. I wish you wrote more extensively on county issues!
Thanks as always, Matthew, for your incisive investigative reporting and balanced and articulate presentation of the issues. The increase in sales tax revenue that you point to may be the major driver of the County’s direction on tourism when faced with declining capital reserves and a potential future budget shortfall.
You also point out that the biggest contributor to the rise in sales tax is from new home construction; and, given the 12% projected population growth over the next 20 years–600 new homes on Orcas–Islanders’ real focus should be not so much on tourism but on residential growth and development (most of which will not, unfortunately be either “affordable” or centered in our Urban Growth Areas). In fact, tourism is just the tail wagging the development dog. In economic terms, it’s well documented that residential growth never pays for itself (in property taxes) by comparison with the services it demands. We are seeing this in the regular requests for levy lid lifts by the County and junior taxing districts. So, in the long term, is the increased sales tax revenue really a benefit to the County?
All of this points to the importance of our collective choice of our next two County councilmembers, and their selection of our next planning director. I look forward to Part 2 of your article and candidates Hughes’ and Paulsen’s responses to your questions.
Thank you for your comment, Brian.
Could you please provide a citation to the source of your statement that “In economic terms, it’s well documented that residential growth never pays for itself (in property taxes) by comparison with the services it demands.”
I thought the point of levy lifts was to keep pace with the increased costs of providing such services due to inflation, depreciation, regulation and benefits for government employees. I also thought that property taxes (among the highest in the state) were the primary source of county revenue.
Am I missing something here? Are you advocating higher property taxes or a crackdown on residential construction?
Scott Hallquist–Just google public (or municipal) costs of development or development vs. community services. That’s why so many cities legally unable to raise taxes have resorted to an impact fee strategy. (We haven’t).
You are correct that levy lifts address all the things you mention. They are necessary, particularly in the wake of the Eyman tax restrictions, and I have nothing against them. The San Juans population is generally well-educated and liberal in that regard, although the community may see limits (as with last year’s poorly executed road levy lift) as budgets become tighter.
I am certainly not advocating for higher property taxes, although I’m tired of the myth that that property taxes are “among the highest in the state.” Assessed property Values are among the highest in the state. Tax Rates (held to 1% like everybody else) are, in fact, the lowest: https://dor.wa.gov/about/statistics-reports/average-levy-rates-county-interactive-data-graphic
And even if they weren’t, wouldn’t it be worth the premium to live here?
As far as a “crackdown” on residential construction–I wouldn’t put it that way; but we DO need to talk about a plan for development limits to keep it worth that premium.
“When you put the two (lodging tax revenue, and sales tax revenue) together, the combined revenues have gone up 9% from what at the time was a record year for lodging and sales taxes.”
“Is all of this an argument in favor of, or against, the pursuit of more tourist dollars? It seems clear that those concerned with island-wide impacts, both human and non-, shouldn’t put all their grievances on the shoulders of visitors. But with population growth – and overall county revenue – on a steady rise, putting growing pressure on island resources and quality of life, the argument for more visitors doesn’t quite hold water either.”
Well stated, thank you Matthew. The more things change, the more they stay the same.
The decision by the county council to take the advice of the SJC interim Assistant County Manager, who is the director of SJC Parks and Fairs Director, (get it, PARKS AND FAIRS), and also the Visitor’s Bureau (get it, the VISITOR’S BUREAU), and the LTAC Committee who is comprised only of business owners and vacation rental operators (get it, COMPRISED OF ONLY BUSINESS OWNERS AND VACATION RENTAL OPERATORS), to not only renew the Visitors Bureau’s contract, but to extend it from one to three years, and to also concentrate on promoting tourism during our buffer seasons, (in spite of all of the public comments made both past and present), is extremely disappointing to say the least. The status quo wins, and in the end… everybody loses. It’s a slap in the face to those of us that chose to move here based on reasons other than taking advantage of our natural wonders and making money off of it, (while they’re destroying it).
Promoting increased tourism is a zero sum end game any way you look at it. It will continue to inflate the entire market (housing prices, land taxes, commodities… everything). It will continue to ensure more non-living wage jobs with no benefits, it will continue to increase income disparity and inequality, it will continue to increase our carbon footprint, degrade our environment and ecological systems, and will help lead to buildout sooner than later. There are so many examples of this around the state, the nation, and the world that it’s laughable that we are even talking about it in this context.
If declining capital reserves and a potential future budget shortfall are the impetus for such short range thinking, why don’t we just enact a modest fee on tourists to make up for this shortfall? Let’s see, 1 million tourists a year at $5 each….
Brian, you said, “…given the 12% projected population growth over the next 20 years–600 new homes on Orcas–Islanders’ real focus should be not so much on tourism but on residential growth and development (most of which will not, unfortunately be either “affordable” or centered in our Urban Growth Areas).”
and,
“In fact, tourism is just the tail wagging the development dog.”
Respectfully, I’m not sure we are connecting the dots. Though both of these issues are critical, over-tourism is here now, while over-growth is still on the horizon. Can’t we do both, (work on over-tourism and over-growth at the same time)? They are both inextricably interwoven.
And while we are focused on this, why are we seemingly so unable to see that SJC’s biggest problem isn’t our current, (and ongoing) economic shortfalls… it’s ecological overshoot and climate change, and the intersectionality of our guiding policies in relation to this? Are we really going to continue fooling ourselves that this is not happening and that our guiding policies do not contribute to it? At the rate we are going, and with the approach we continue to take, are we really to think that we’re going to be able to solve the crisis we have now in 20 years time once the debate has shifted from, “We owe it to the world to share our natural wonders,” to, “the NW is blessed to be a relatively safe haven from the effects of climate change and we owe it to the world to let them move here for their very survival?”
Everything the county is doing in relation to combating climate change (boosting EVs, developing mass transit systems, etc.) while continuing to over-promote tourism is only mitigating the symptoms of the problems while amplifying the problem itself… and is only making things worse in the long run. Only a reduction (a moderation) in the numbers of people and the resultant reduction in our consumption and pollution will help solve this crisis. Anything else… ANYTHING ELSE, is only a bandaid on an open wound and is, again, only making things worse.
Be sure and pick up your Visitors Bureau / Chamber of Commerce “Springtide Relocation Almanac” the next time you’re on the ferry, or just pick up a copy of this week’s local paper and see the full page promotion from the Visitor’s Bureau, (get it, FULL PAGE PROMOTION), to see the type of ongoing cheesy tourism promotion that represents the correlation between mass tourism and buildout, (which has all of the above mentioned problems built into it).
You know when you can tell when those around you are not paying attention and seeing the big picture? When they talk a lot about change, or live with the hope that the next set of electors will bring about needed change… but then continue doing the same thing as usual.
The following should be required reading for all SJC political figures and advisory body members–
William E. Rees: Ecological Overshoot is Driving Humanity Toward Collapse
https://www.youtube.com/watch?v=GPmMeF0B4v4
I highly recommend watching the video recording of this council meeting.
It is important to note that multiple surveys and community workshops have been conducted on this topic over the last several years. All of them have come back with the same results: A large majority of residents feel that the islands are at or beyond visitor capacity and that we should reduce or eliminate funding for advertising and marketing.
Ken, Brian, thanks for the kind words. On Tuesday we’ll post the responses from Justin Paulsen and Rick Hughes.