The Suffolk County Legislature voted 14-to-3 last week to raise its hotel/motel tax from its current 3-percent rate to 5 1/2 percent. The increase starts on June 1, just in time for the season. Legislator Bridget Fleming, who represents the South Fork, Shelter Island, and eastern Brookhaven Town, was one of the three who voted against the hike, along with Al Krupski of Cutchogue and Anthony Piccirillo of Holtsville.
“To be truly fair, the entire East End should benefit more than it does from this tax. Southampton and East Hampton Town provide 43 percent of the tax countywide. Not enough of the tax comes back to benefit us,” Ms. Fleming said in a phone call.
The occupancy tax is levied by hotels, motels, inns, and even Airbnb-style rentals. The tax collected is transferred to the county each quarter. It is forecast to raise approximately $23 million a year, with Montauk hoteliers paying $6.4 million.
Leo Daunt, president of the Montauk Chamber of Commerce and the owner of Daunt’s Albatross, a motel, strongly opposes the tax increase.
“Montauk pays about a quarter of the total funds raised by this tax, and if you look at what comes back here it’s pennies,” he said. “No infrastructure, no money for septic. I’m not opposed to paying taxes, we just want the money to be distributed fairly. It’s taken out of Montauk and then redistributed west, where there are more votes.”
“The vast majority of money will be spent on a proposed convention center in Ronkonkoma,” said Jennifer Fowkes, executive director of the Montauk Chamber of Commerce, which boasts a membership of 300 businesses. In March, when the Legislature held a public hearing on the proposed tax, Ms. Fowkes put it bluntly: “Our business members feel they are left out of the funding.”
“A convention center should not be built on our backs when our downtown beaches are eroding to the point where there’s exposed sandbags on them for much of the year,” said Mr. Daunt.
The convention center is part of the Midway Crossing project, a $2.8 billion proposal that would span 179 acres and connect the Long Island Rail Road’s Ronkonkoma station to MacArthur Airport in Islip. Also included in the monster development is 2.7 million square feet of entertainment and tourism space, health-care facilities, a 300-room hotel, a convention center, and a sports arena.
Mitch Palley, chair of the Midway Crossing development, spoke at the March hearing, arguing that the plan should be considered “in the larger context of tourism” for the entire Island. The money raised in Montauk annually by the tax increase “doesn’t get you much for infrastructure,” he said.
Ms. Fleming contended that the revenue from the tax is dependent on Montauk’s infrastructure being able to support tourism. If the beaches erode and if the septic system is overloaded, fewer people will visit, she said, meaning less tax. “Is there not value in sustaining that revenue stream?” she asked Mr. Palley. “We need to invest in the assets that are creating the revenue.”
Ms. Fleming pointed out that Discover Long Island, a tourism promotion agency, will see its budget increased from $2 million to $6 million. “Businesses on the East End would welcome a redistribution of the funding so that less goes to tourism promotion and more goes into infrastructure,” she said.
Mr. Palley stated that the county budget was over $3 billion a year, and said that money could be found elsewhere to support Montauk’s infrastructure. A similar argument was made by Brian DeLuca, a co-founder of the East End Tourism Alliance, which partners with Discover Long Island, an organization he used to chair, and which is a beneficiary of the tax. “Figure it out elsewhere,” Mr. DeLuca said.
Another partner listed by the East End Tourism Alliance is the East Hampton Chamber of Commerce, which has not been in operation for some time.
“I’ve booked 340,000 nights since I bought Gurney’s in 2013 and not one of those nights came from Discover Long island,” said George Filopoulos. “So tell me why $4 million should go there, and not to keep our town from sinking.”
Gurney’s alone would pay $1.8 million a year into the tax, and Mr. Filopoulos said he was “shocked” at how little Montauk will get back. “The East End requires zero in the way of promotion,” he said. “Give us some of our money back to solve some of our problems.”
If Montauk could take the $6 million it pays and bond it, he told the Legislature, “we could solve our wastewater project. We’re funding $4 million for a group that has no accountability. If that $4 million came back as infrastructure, my staunch opposition would turn into support.”
“Part of what’s powerful about this story, despite the fact that the vote went against us, is how the business community came together in Montauk,” said Mr. Daunt. “Tourism is really important out here, and the money raised from it needs to come back to support the environment and the year-round community. The Montauk family is often at odds, but this is one area where we’re all united.”
“It’s not an unreasonably high tax,” said Ms. Fleming. “Many business owners understand that. There’s room for this tax, and they’d be okay with it, but the current distribution of funds needs to change. This version needs to be enacted before we can consider any kind of amendments. It’s a process that’s going to take some time. Hopefully, we can adjust it by next season.”
