Tourism department asks legislature to replace lost federal marketing dollars with $25M in state funding

The Department of Tourist Development told the Finance, Ways and Means Committee on March 17 that Tennessee's visitor economy generated about $30 billion in visitor spending last year and asked the legislature to replace federal marketing funds with a $25 million state investment.

Commissioner Mark Ezell said that, using a 7 percent blended tax figure, the department's estimate of $30 billion in visitor spending translates into about $2 billion of state and local tax receipts. "When visitors pay, residents benefit," he said, citing a departmental analysis that places Tennessee in the top tier of states for tax savings per household from visitor spending.

The department asked the legislature to replace the expiring federal drawdown by approving $25,000,000: $10,000,000 in new recurring funds and $15,000,000 nonrecurring to keep promotional and destination-development programs running. Ezell said the larger recurring component would permit multi-year commitments in overseas markets and other campaigns that the department had pursued while federal CARES and ARPA funds were available.

Transportation and market-access initiatives were a recurring part of the presentation. The department highlighted two new direct international routes—an April 10 nonstop from Dublin, Ireland, and service tied to Icelandair—and estimated a combined economic impact of about $125,000,000 from those route partnerships. Department officials said those linkages serve as "jumper markets" connecting Tennessee to broader European travel networks.

Officials also described local and rural work funded with recent marketing capacity. Assistant commissioner Melanie Beauchamp described destination-development work in dozens of counties, including a program branded "Bill Dance Signature Lakes" that will cover 14 lakes across 39 counties with an approximate combined project investment of about $25,000,000 in partnership with the Tennessee Wildlife Resources Agency and private sponsors. The department said occupancy-tax receipts in participating counties have risen sharply in some cases — one cited example moving from $5,000 to $500,000 over several years.

Members asked about operational items tied to visitor services. The department is taking on administrative responsibility for 16 state welcome centers (the rest areas remain under TDOT) and reported 15 vacancies among welcome-center staff. Officials said a vendor, Jones Lang LaSalle, will handle maintenance contracts that fall outside in-house staff skills and that Allied Security provides 24/7 coverage at welcome centers (except one downtown Memphis location that closes at 11 p.m.). Department representatives noted nine of 16 welcome centers already have adult changing tables.

The department said short-term-rental collections have improved after legislative changes that allow the Department of Revenue to collect occupancy taxes on behalf of counties, and that increased registration and collection improved revenue available to smaller counties.

Commissioners also described their marketing strategy and the role of recurring funding: staff said the recent federal dollars allowed the agency to expand advertising into new markets and win additional flight seats into Tennessee airports (the agency cited an increase of roughly 2.1 million seats attributable to new markets versus six years prior). The department framed its pitch to lawmakers around the return on investment from marketing that generates incremental out-of-state sales tax.

Ending: Department officials asked the committee to consider the governor's budget proposal to partially replace expiring federal funds with state dollars so the department can continue multi-year marketing, rural destination development and sporting-event attraction programs.