Escambia County will need to rewrite its ordinances surrounding its Tourist Development Tax if the preliminary findings of a state audit hold.
Earlier this month, the Florida Auditor General’s office sent the county its preliminary findings from an audit of Escambia County’s Tourist Development Tax fund, more commonly known as the bed tax.
The audit, which looked at the county’s TDT spending in 2021, found the county’s ordinances surrounding the tourist development tax were contrary to state law, and it found the County Commission and the Clerk and Comptroller Pam Childer’s office did not properly document the connection to tourism for $614,156 of TDT funds as required by state law. Some of the funds spent on beach related items came out of bed tax funds only allowed for sports tourism.
The audit also found that the Escambia County Commission should have done its own review of expenditures that its Tourist Development Council flagged as being unauthorized when it initially requested the audit.
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During a special TDC meeting Friday called to respond to the report, Escambia County Commissioner Jeff Bergosh said the county attorney’s office is working on the county’s official response to the report.
Bergosh, who is the County Commission’s representative on the TDC, noted that the auditor’s preliminary report was not asking the county to pay any funds back but only clarified why the funds being spent are connected to tourism.
“Frankly, perhaps we haven’t been doing a good job of doing that,” Bergosh said. “So, I don’t think there’s any nefarious stuff in here. I think there’s things we need to tighten up, and I think you will see the Board of County Commissioners take that action.”
The TDC, whose members are appointed by the County Commission from stakeholders in the local tourism industry, has been pushed for a state audit of TDT spending since 2020 largely over the administrative costs being charged to manage the fund by the Clerk’s office and questions over using the funds in the county’s Marine Resources Division.
In 2021, the county agreed to make a formal request to the Florida Auditor General.
The audit found that the county’s ordinance required the Clerk’s office to allocate 3% of the county’s TDT funds to administer the tax, but state law only allows the clerk to keep the actual cost not to exceed 3% of the total TDT.
The audit found that in 2021, the Clerk’s office only kept $300,000 for administrative costs or about 1.7% of the $17.67 million TDT funds collected that year, following the state law instead of the county ordinance.
The audit said the county’s ordinance contradicted state law and recommended the County Commission change the ordinance.
The TDC called a special meeting Friday to review the audit and voted 8-0 to send a response to the audit saying it agreed with the findings but asked the auditor general to add in a recommendation that the Clerk’s office have a documented “cost allocation methodology “to determine its true administrative cost.
The letter notes the auditor general made a nearly identical recommendation in a 2017 audit of Walton County’s spending of funds related to the Deepwater Horizon Oil Spill.
TDC member Jim Reeves said the request made sense to him, noting that the cost of administering the tax shouldn’t change drastically, regardless of how much is collected.
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“To me, this is just perfectly logical that if I collect 3% for administration on $1 million and then suddenly, I have $20 million, the cost of the administration cost of $20 (million) ain’t a hell of a lot different of $1 million,” Reeves said.
TDC Chairman David Bear told the News Journal on Friday that he was happy the preliminary report had been completed.
“The preliminary findings and recommendations really aligned with what our concerns were,” Bear said. “They had the exact same findings that we did, except for this one that we just discussed today about the cost analysis for the administration fee.”
As for the questioned $614,156 in spending, the preliminary report said the county and clerk failed to properly document why the expenditures were related to tourism. The report notes that some of the funds, such as $73,936 for ATVs intended for a sea turtle patrol on Pensacola Beach, were purchased with a portion of the bed tax that can only be spent on sports tourism-related items.
Bear said if the final report does conclude they were unauthorized, the funds should be paid back by Childers.
“I think it’s the right thing to do,” Bear said. “I think that’s what the statute’s obligation and the clerk’s obligation is to do, is to make sure that she doesn’t issue any payments for unauthorized expenditures.”
Bear said that a benefit of the audit is that in the future, the County Commission will take the work of the TDC more seriously.
“The statute requires the County Commission to make a decision if they think it’s legal or not legal,” Bear said. “They clearly thought they were authorized. That’s why they budgeted for them and made them, but I think it makes them think more about those expenditures before they budget them.”
This article originally appeared on Pensacola News Journal: Escambia County’s bed tax ordinances contradict state law, audit says