Do you notice the taxes itemized on your sales receipts? Would it inspire much confidence to see, among sales, restaurant and lodging taxes, a tax dedicated to “waste, fraud, and abuse?” An audit of expenses from Nebraska’s Tourism Commission (NTC) shows state lodging taxes were used for that very purpose.
Among the unchecked payments is a cost overrun of $4.4 million paid to Bailey Lauerman, the ad agency behind the infamous “Visit Nebraska. Visit Nice.” campaign. Other questionable spending includes a $44,000 speaker fee for NTC’s annual conference and more than $18,000 to relocate a Commission staffer from Sidney to Kearney. That latter amount is enough to rent a fleet of U-Haul trucks or buy gas for 341 round trips in a pick-up.
Unfortunately, voters cannot respond at the ballot box to the abuse uncovered by the recent audit of the NTC staff’s spending habits. The decision of whether there will be any consequences rests with the Commission itself, the Legislature and the governor. Governor Ricketts is one of many calling for NTC’s director to be fired, and more oversight of the agency, while appointed NTC commissioners and travel groups believe it should remain independent.
But if the goal is to prevent this irresponsible spending in the future, one question that may be worth asking is whether Nebraska really needs a taxpayer-funded tourism commission in the first place.
While NTC is mostly funded by a 1 percent state lodging tax, state lawmakers have been called on to provide general funds from sales and income taxes for the agency before. One can hope these additional dollars would not have been made available if the Legislature knew then what it knows now.
Even at their best and with the most competent management, a regular stream of taxpayer funding means government agencies don’t face the same personal financial risks or losses that businesses, nonprofits, and individuals do with their own money. That’s why any publicly-funded entity, tax, or regulation should be evaluated at least in part upon whether it fulfills an essential or irreplaceable role of government.
Industry groups will hate hearing it, but the Nebraska Tourism Commission is by definition a non-essential agency engaged in non-essential, and recently, wasteful spending. While it may be “Nebraska Nice” to have, NTC’s functions are not in the same universe of importance as education, criminal justice, roads, or elections, and the role NTC serves can certainly be carried out by private businesses and community nonprofits.
The state of Washington provides a real-life case study that tourism can thrive without government sponsorship. Their tourism office closed after a budget shortfall in 2011. A privately-funded entity called the Washington Tourism Alliance (WTA) has taken its place.
While its leadership may have disagreed with the end of state tourism funding, the travel industry in the state’s largest city is seeing growth that is outpacing the country as a whole. Statewide, Washington tourism has experienced modest growth as well. Of course, WTA still believes they could benefit from taxpayer funding, but who wouldn’t?
Even major tourism hubs like California, Alaska, and Nevada, which do have tourism agencies, use a more decentralized approach by only levying lodging taxes at the local level. In Nebraska, the state lodging tax could be combined into the existing county tax, or the tax could be ended altogether, leaving more funds in the pockets of businesses who may want to support private tourism programs.
If senators spend less time approving appointments and supervising agencies, they can then devote more of their attention to crafting policies that remove barriers to travel industry businesses providing marketable amenities and experiences that travelers are looking for.
Lawmakers should draw from this learning experience when crafting larger state spending priorities. Spending restraint will need to be a major component of tax relief efforts in the years to come, and far less will be accomplished if senators can’t be consistent fiscal hawks when programs are loved by their supporters, or appear too small to make a difference in the budget on its own.