Tourism tax could have big impact

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By Sherry Robinson

There’s hardly a town in New Mexico that isn’t affected by tourism, even if visitors are just passing through. And this was not a good year.

If you can agree with those two statements, maybe you can agree that there is such a thing as a good tax. I would define a good tax as one with a specific, desirable goal that takes a small bite and inflicts minimal pain.

The tourism folks are hoping lawmakers see their proposal that way.

Tourism Secretary Mike Cerletti, an industry veteran, has proposed a tax of one quarter of one percent on restaurant and banquet food. He figures this tax will generate around $6 million a year that could be spent on marketing and advertising.

The hit on consumers would be 2.5 cents for every $10 spent in restaurants. Of course, the lodging trade group likes the idea. Its restaurant counterpart does too, provided the revenues are earmarked for tourism.

Presently, New Mexico spends $2.6 million a year to promote itself. Arizona spends $6 million, Utah spends $7 million, Colorado spends $15 million. And Texas, the attention hog, spends $24 million. Compared to the Lone Star State, we’re the prettier girl in the dime-store dress.

Cerletti sweetens the offer by proposing that marketing be entirely supported by the tax, which would allow the state to keep its $2.6 million in the general fund.

This is not a new issue. In 1995 New Mexico was spending the grand sum of $850,000. Our fellow Four Corners states were spending a lot more, and Texas, the shameless hussy, was spending $8.6 million.

When I was reporting on the issue back then, the tourism people were on the verge of storming the state capitol with pitchforks after the Tourism Department got its budget cut. Back then our paltry $850,000 generated $2.7 billion in revenue. Today our $2.6 million generates about $5 billion.

In 2000 the industry was still fighting tourism budget cuts. This was after a dreadful season when media coverage of our wildfires made it appear the entire state was ablaze. Plus, gas prices were high and it snowed anywhere but here.

At that point, the Tourism Association of New Mexico trotted out the results of increased promotional spending in 1998 to show impressive results in 1999.

“This is what grows tourism,” said then executive director Linda Waterman. “We know advertising works.”

That year the association was bucking Gov. Gary Johnson’s flat-budget mandate. “This is no time to be faint-hearted,” Waterman said. “We still have the potential to make lots of money.”

Now some smart aleck may argue that tourism is an industry of minimum-wage, dead-end jobs. Let’s not forget that in New Mexico tourism helps support arts and entertainment – from the Navajo silversmith to the Spencer Theater — not to mention our museums (artifacts to aliens, horses to race cars), parks and monuments.

Not everybody is a chamber maid. But we could use more of those jobs too – our legions of high school dropouts have to work somewhere.

Sen. Tim Keller, an Albuquerque Democrat, told the New Mexico Business Weekly he thought the tax “was a rare example of when the business community and government agreed on a tax that is a win-win for both of them. The people who will be against it will be tax policy purists who generally oppose all earmarks. And from a tax policy perspective, they’re absolutely right.”

One of those purists is Senate Finance Committee Chairman John Arthur Smith, Deming Democrat, who said earmarks deprive lawmakers of the right to steer funds to what they consider pressing priorities.

And, with so much red ink, it’s just not a good year, he added.

Sometimes you have to spend money to make money. This is no time to be faint-hearted.