Dedicated Government
Taxes
Benefit Byways
A variety of government-mandated taxes or trust funds are benefiting byways across the U.S.
Who:
Agency and byway organization representatives and legislators work together to create mandated funding in support of byway development and management. Funds are transferred to the byway organization through a designated state agency, often the Department of Transportation.
What:
Government-mandated or dedicated taxes and state trust funds are created by legislative action to support specific entities or purposes, e.g., trails maintenance, drug and alcohol abuse prevention, schools, libraries, and transit systems.
The taxation may apply to the sales of gas, food, alcohol and other goods, or it may be a tax related to the use of a specific business, such as, a restaurant or lodging establishment. Occasionally, a dedicated tax has linked two unlikely entities - in the 1880s in Georgia, circuses paid a $200/showday tax in support of educational purposes.
Examples of dedicated taxes supporting one of America’s Byways in the Western U.S. are:
• a 0.1% RAPZ (recreation, arts, parks and zoo) tax; in one state a byway applies for RAPZ funds annually
• a 1% restaurant tax that can be used for conventions, cultural, parks, or restrooms projects; in on state a byway organization (a Chamber of Commerce) has used the tax funds as competitive match dollars; the byway organization must write a request for funds
• a 3% room tax dedicated for county-level tourism development and promotion, including byway promotion, in one state can be used for tourism infrastructure development.
When:
Legislation creating dedicated taxes may not carry any time restriction or it may include a sunset clause that authorizes collection of funds for only a specified length of time. In some cases, when time-limited taxation expires, the tax may be reinstated for the benefit of the state’s General Fund. An expiring dedicated tax may provide an opportunity for an enterprising byway organization to have that tax renewed and redirected for byway purposes.
A dedicated tax revenue bond may be restricted to a specific, time-limited project, e.g., construction of a convention center.
Various deadlines may be set for applying for dedicated funds that are collected into a state-administrated account.
Where:
Dedicated taxes in support of scenic byways should be possible in any U.S. state.
How:
Byway advocates must work with legislators to develop dedicated taxes for byway organizations. In some cases, legislation may require a property owner referendum. Study your state tax code to see what dedicated taxes already exist, which taxes may be about to expire, and where the gaps are that offer the opportunity for creating a tax mandated to support the byway organization.
Funding Potential:
The funding potential for byway organizations able to access dedicated taxes will vary by state. In one county’s case, the room tax revenue, available to the byway organization by application process, totaled $260,000 one year; the restaurant tax brought in almost $700,000; and the recreation, arts, parks, and zoos tax raises about $100,000 annually.
Why Dedicated Taxes for Byway Organizations:
• Create a legislated source of funding
• Can create a source of revenue that increases with increased activity, e.g, increased gas purchases, increased lodging occupancy
• Create a byway-government partnership
Resources:
To learn about dedicated taxes for the arts (and arts programming on byways) – go to the Americans for the Arts website to find the following publications for sale:
Open Space, Recreation, Farmland and Historic Preservation Trust Fund Taxing Districts – provides insight into one state’s process for designating taxes in support of recreation and conservation purposes.
State Tax Codes/Dedicated Taxes: go online to www.google.com and type a search for one of the following: State Tax Code – when the search is complete, scroll the list until you find your state; State Tax Code + your state name, e.g., State Tax Code New York; or type your state name + Department of Taxation, e.g, Alabama Department of Taxation. Run a similar search with your state name and the words dedicated tax.
U.S. Fish and Wildlife Service Endangered Species Grants
Wallop-Breaux Sport Fish Restoration Act established the Aquatic Resources Trust Fund to administer the return generally via state fish and wildlife agenices - of excise taxes to fishing and boating communities.
Why All the Amendments? – begin on page 4 for an informative history and commentary on dedicated taxes, including a motor fuel tax, and on trust funds built with dedicated taxes in the State of Georgia.
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