As the General Assembly continues toward the mandated end of its annual Session this Saturday, March 14th, we are still waiting on a final agreement between the House and the Senate on the budget.
The main point of difference has to do with tax incentives for data centers, and pits new Governor Abigail Spanberger and House Speaker Don Scott against Senate President pro tempore Louise Lucas. Hidden in that budget are two provisions that VRLTA is watching closely and advocating on: funding for the Sports Tourism Grant Fund, and a proposed regional transient occupancy tax hike on Northern Virginia as part of an effort to fund Metro.
The funding proposed for the Sports Tourism Grant Fund in the House Budget is $1 million, the same amount that proved the utility of the system when Virginia Tourism first instituted it with federal funds. That is much lower than the $5 million that outgoing-Governor Glenn Youngkin put in his proposed budget, and even lower than the $2.5 million that is dedicated in the Senate version of the budget. When Virginia Tourism piloted this concept using just $1 million of ARPA funds, they attracted 45 events over 18 months, and generated an astounding $42.7 million in visitor spending. As conferees meet this week to try to hammer out a bargain, VRLTA is advocating for that portion of the Senate budget so that Virginia Tourism has as many resources as possible to stand up the fund and further prove the concept.
The Senate budget also unfortunately contains a regional transient occupancy tax increase of 1% on Northern Virginia. The stated purpose for this has to do with the General Assembly’s decades-long search for a dedicated funding source for the regional Metro transit system. This comes at a really devastating time for the Northern Virginia lodging industry. The region has long been a massive driver of hotel business, not only for tourism but for business travel to interact with the federal government and defense industry. But the latest industry metrics show that year over year occupancy is down almost 6% and the average daily rate for a hotel room in January was 11.6% lower. VRLTA continues to advocate to the conferees about the outsized impact that a regional tax increase of this kind would threaten.
This all takes place as the final versions of multiple pieces of legislation are still being worked out. Employment-focused bills like paid family and medical leave mandates and paid sick leave are still down in the details in conference committee, and the future of gaming and gambling in Virginia remains unclear on a number of fronts. The newly-united House, Senate, and Governor are keeping things interesting all the way down to the wire.