THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, February 12, 1995 TAG: 9502120073
SECTION: LOCAL PAGE: B1 EDITION: NORTH CAROLINA
SOURCE: BY ANNE SAITA, STAFF WRITER
LENGTH: Long : 103 lines
Each summer, Bob Gibson, his wife, Sarah McConnell, and their three children leave Charlottesville and head for a week's vacation at a Currituck County beach house.
They sunbathe and body surf near shores patrolled by lifeguards. They drop by the county's satellite office in Corolla for information, watch wild horses roam freely and walk around The Whalehead Club.
Since 1987, the Gibsons and thousands of folks like them have helped pay for these services and attractions, as well as others, through an occupancy tax levied on campgrounds, hotels, motels, cottages and huge homes they rent throughout the county.
The tax has added $5.8 million to the county coffers since it won approval from the General Assembly in 1987. It was raised from 3 percent to 4 percent four years ago.
``Obviously, we help mushroom the size of the community every summer, and we ought to pay for it,'' said Gibson, 44.
But while Gibson and other annual visitors may have few qualms about paying the tourist tax, some Currituck County residents have taken issue with how the money is spent.
With the recent county purchase of 10.4 additional acres at The Whalehead Club for $1.26 million, only about $200 remains in uncommitted funds through the fiscal year.
``The occupancy tax has to be the most misunderstood source of revenue in Currituck County,'' said Daniel F. Scanlon II, a certified public accountant and the county's finance director.
Much of the misunderstanding stems from projects that are funded through the locally administered, locally collected levy.
The additional one percent added to the tax in 1991 was earmarked for the Currituck Wildlife Museum that eventually will be housed at The Whalehead Club in Corolla. The once-lavish hunt club was bought by the county several years ago under a cloud of controversy.
Most of the revenue from the other 3 percent of the tax is committed to projects and programs that promote travel and tourism, including the annual Fourth of July celebration that draws thousands to Corolla each year.
But up to one-quarter of that 3 percent - about $200,000 annually - can be devoted to ``any lawful purpose.'' Some residents have argued passionately that these dollars ought to be doled out to help build desperately needed schools.
Officials who control the purse strings, however, have spent up to 90 percent annually on tourism and related services. One exception was $25,000 to help install lights around ballfields at the county high school about two years ago, Scanlon said.
Other projects that blend tourism and general use have included a water study and test drilling on the Outer Banks that would benefit all county residents and $275,000 recently allocated for hangars at the Maple airport.
Public service projects that can be funded by occupancy tax dollars must feel the impact of tourism, such as police, emergency medical services and garbage disposal.
Scanlon said extra sheriff's deputies and solid waste disposal once were paid for with Currituck's occupancy tax, but public uproar led to ad valorem taxes taking over these costs.
Despite its controversy, the occupancy tax program has plenty of supporters.
``It has proven to be a popular approach to raising revenue for services related to travel and tourism,'' said Ed Regan, deputy director of the North Carolina Association of County Commissioners.
``It's the kind of tax being used so extensively around the country that those who travel frequently don't even seem to notice it anymore.''
About 60 percent of North Carolina counties have an occupancy tax. Unlike Currituck, where funding is decided by commissioners, most localities have a tourism board set up to handle the tax money, Regan said.
The Currituck setup has placed its elected officials under sometimes intense public scrutiny for programs that have or have not received a portion of the tourist tax receipts.
Currituck campgrounds and motels on the mainland contribute to the tourist levy, but ``arguably 99.9 percent of the occupancy tax is generated on the Outer Banks,'' Scanlon said.
Most of it is also spent there - for economic development, satellite operations, promotions, emergency services, and operation and debt-service on The Whalehead Club.
``Even if you promote the Outer Banks, the mainland does benefit from the flow of traffic to the Outer Banks,'' Scanlon said, admitting ``it's a difficult balance to determine how the money should be spent.''
One statewide special interest group is lobbying legislators to place uniform restrictions on the tax, which would essentially funnel all funds to tourism rather than allow up to a quarter of annual receipts to go to any legal use.
``That, I think, could endanger the whole basis of the tax,'' Regan said. ``Some local officials are going to begin having second thoughts on that.''
Another obvious threat to the tax is a hurricane, which could wipe out tourism temporarily.
Scanlon also mentioned less obvious factors - civil unrest, economic downturns, an energy crisis - that could force vacationers to stay home. That's one reason the county uses much of its tax money for one-time appropriations or services that would not be needed if tourism slumps sharply, he said.
``The intention of the occupancy tax is by no means to subsidize the tax base,'' Scanlon said. ``It's to complement it.'' by CNB