Texas tourism leaders decry cuts to state tourism fund

Texas lawmakers slashed funds this legislative session intended to promote the Lone Star State as a destination for domestic and international travelers — a move tourism officials say could severely dampen the state’s economy and put jobs at risk.

Lawmakers in Austin cut the state’s tourism funds in half — from a budget of $67.7 million in 2015 to $34 million to market Texas as a travel destination and conduct research about the state’s tourism economy during the next two years.

To make up for lost funds, legislators implemented a cost-sharing initiative that authorizes the governor’s office to seek matching funds in the form of gifts, grants and donations from the hospitality industry, local governments and nonprofits.

Texas tourism officials say the move could jeopardize one of the state’s largest industries. Tourism activity in Texas generated $67.8 billion in spending by domestic and international travelers and employed more than 645,000 people in 2015, according to a study by the U.S. Travel Association. A separate study conducted by the Texas Tourism office found the state received $7.92 in tax revenue for every dollar plugged into state tourism promotion efforts during the 2016 summer travel season.

Budget cuts to state-funded tourism programs in other states have reportedly led to catastrophic results for hospitality groups. Colorado lost $1.4 billion in traveler spending in 1994 after it shuttered its travel promotion program the previous year, a report by the U.S. Travel Association found. Within four years, the state lost $134 million in tax revenue and its share of the U.S. vacation travel market fell by 30 percent.

“It’s a simple fact. A cut in tourism marketing is not the cost-savings measure it appears to be,” Roger Dow, CEO of the U.S. Travel Association said in an email. “A reduction means less revenue, leading to fewer jobs and tax collections.”

“Our competitive position in the marketplace will begin to decline very rapidly,” David Teel, Texas Travel Industry Association CEO, said in a phone interview. “And the ultimate casualty is going to be jobs.”

State Rep. John Zerwas, a Richmond Republican who chairs the House Appropriations Committee, was not available for comment Wednesday, chief of staff Nelda Hunter said in an email. State Sen. Joan Huffman, R-Houston, and state Rep. Oscar Longoria, D-Mission — who each chair subcommittees that partially address tourism funding — did not respond to requests for comment. The Texas Legislative Budget Board — the state agency that makes recommendations on the state’s biennial budget — did not return requests for comment.

“Tourism is of great importance to my district and the entire state, and we continued funding in SB 1 to attract visitors to Texas,” state Sen. Jane Nelson, a Flower Mound Republican and chairwoman of the Senate Finance Committee, said in an email. “In a tight budget session, we directed local matching funds to ensure that promoting Texas as a tourism destination is a shared responsibility.”

The Legislative Budget Board backed the move to a cost-sharing system in a January staff report, citing Florida’s tourism funding system as a model. In that state, private contributions to the state’s hospitality marketing hit $141.8 million in 2015 as state lawmakers ponied up $73 million.

Initiating such a system would save Texas $62.6 million within five years, according to the Legislative Budget Board report.

“These benefits are provided at no cost to businesses in the tourism industry,” the report reads.

But it’s not exactly fair to expect Texas’ tourism economy to be able to match state funds as efficiently as Florida’s, Teel said. The Sunshine State’s hospitality industry generated almost $91 billion in 2015, second only to California where tourists spent about $129 billion, according to the U.S. Travel Association.

A robust cruise-line industry as well as several major theme parks including SeaWorld Orlando, Universal Studios and the Walt Disney Resort give Florida a major competitive edge over Texas, Teel said.

And state hotel occupancy taxes, paid by hotel guests, already fund state tourism promotion, Teel said. The state collected $533.5 million through the tax in fiscal year 2016, more than double the $235.8 million the tax collected in 2000, according to figures provided by the state comptroller’s office.

“The private sector is already investing and is already being charged,” said Keith Arnold, director of the South Padre Island Convention and Visitors Bureau.

Abbott’s office is “actively working with relevant stakeholders” to draw up the one-to-one match program “to keep Texas’ travel and tourism industry thriving.” Abbott spokesman John Wittman said in an emailed statement.

But it’s unclear how local tourism agencies with smaller budgets will fare under the new funding system. Arnold said smaller agencies regularly rely on the state to promote less-prominent travel markets like South Padre Island at conventions aimed at international travelers.

“We know we’re going to have to make some adjustments,” Arnold said. “There’s no doubt about it.”