Bill would restore tourism marketing share in rooms-and-meals split; industry warns of cuts if not fixed

Senate Bill 63, introduced by Sen. Tim Lang at the Ways and Means Committee public hearing, would clarify how the rooms-and-meals tax is split so that the 3.15% allocation for state travel-and-tourism promotion is removed from gross revenue before the 30% municipal share is calculated.

The bill, Lang told the committee, "puts it back to the way it was" by ensuring the Division of Travel and Tourism's marketing allocation is taken first from gross rooms-and-meals revenue, then the remaining amount is split between the state and municipalities. Lang said the change corrects an unintended interpretation by the Department of Revenue Administration (DRA) that had directed the municipal reimbursement fund to be paid before the promotional allocation.

Why it matters: Industry witnesses told lawmakers that the promotional allocation supports statewide marketing that in turn generates meals-and-rooms receipts. Jessica Keeler, president of Ski New Hampshire, said the 3.15% promotional allocation was part of an agreement reached in 2009 when the meals-and-rooms rate was raised, and that since that time the promotional budget has supported marketing and matching grant programs including the joint promotional program (JPP).

Keeler said the statutory change in 2019 effectively moved the municipal allocation ahead of the promotional allocation and reduced the promotional budget by about 30% in statute even though recent budgets had continued to fund tourism at historic levels. "Fixing RSA 78-a:26 so that the 3.15% for the promotional budget is added to the statute and factored before the allocation is done for towns is vital," Keeler said, noting travel-and-tourism supports about 70,000 jobs statewide and that last year's meals-and-rooms tax receipts were estimated at about $328 million.

Mike Summers, president and CEO of the New Hampshire Lodging and Restaurant Association, said the promotional funding reaches markets (for example, Boston and New York) that individual small businesses cannot reach on their own and that the state's marketing is a primary tool to attract out-of-state visitors. "This brings the business to New Hampshire where we then can collect the tax and remit it to you," Summers said.

Committee members asked whether the statutory fix would immediately change this year's tourism budget. Keeler and Lang said the bill would affect future budget cycles rather than the currently proposed tourism appropriation, and that DRA's interpretation has been the source of the difference between the statutory text and how the promotional allocation has been treated in practice.

Several members asked for analysis of potential revenue and visitation impacts if promotional funding were reduced. Keeler and Summers said they were assembling case studies from other states and industry data; Keeler referenced an industry-commissioned analysis that, she said, found roughly $15 in tax receipts for every $1 spent on tourism promotion on average over a multi-year period. Both witnesses cautioned that precise impacts would vary by market and require further study.

No formal action was taken on SB 63 during the hearing; the public hearing was closed after testimony and committee questions.

Ending: Committee members asked to hear from DRA to clarify statutory language and priority of disbursements, and industry witnesses said they would provide supporting analyses to show the potential fiscal and visitation effects of reduced promotional funding.