Lawmakers Raise Hotel Tax, Eye Funds for Ronkonkoma Convention Center

Eastern Long Island hoteliers are decrying the county’s almost doubling of the hotel tax to 5.5 percent arguing that their operations produce the lion’s share of the tax, but they receive few benefits from the fees they collect from guests. Legislators from the west who earmarked proceeds from the tax for a new convention center in Ronkonkoma and promotion of Suffolk tourism industry say it’s a payback for the sales tax monies and other funds devoted over the years to preserve farmland and open space, features that bolster the popularity of the East End.

Voicing their opposition before the legislature, hotel operators see it as an “Extraction Tax” funneling money away from the place it was generated. Leo Daunt, proprietor of Daunt’s Albatross Inn and president of the Montauk Chamber of Commerce, told the lawmakers, “We don’t mind paying a tax, as long as some of that tax comes back to the community.” He called it an “extraction that goes from Montauk to a convention center on the other side of the county.”

Montauk businesses take in about 25 percent of the total tax raised in Suffolk each year with East Hampton and Southampton operators collecting 43 percent, business owners noted. “The county returns next to nothing to our hamlet despite our pressing needs,” Daunt said, adding that East End operators have long sought assistance for erosion control, wastewater treatment, and infrastructure upgrades.

Objections to the tax hike fell on deaf ears with the majority of the legislators who argued that those who could afford East End rates wouldn’t blanch at the tax. “They’ll still come to the beautiful beaches and parks that all of the taxpayers have helped pay for over the years,” said Legislator Nick Caracappa. “The tax is still below the average in New York State and nationally, and we’re proud of that,” he said, continuing, “I see it as a win win situation. We’re generating funds to promote tourism and contribute to one of the largest projects to be based in the county. It will provide jobs for people here on Long Island whose earnings will go to our small businesses and our school districts.” Caracappa tangled with opponents of the tax hike saying, “If you are going to tell me you are upset about a two percent increase in taxes, maybe you should lower your rates.”

A photo of a local Medford hotel that will be affected by the new Suffolk County tax increase.

The legislature’s presiding officer, Kevin McCaffrey, echoed his colleague’s sentiments pointing out that he knows of few places in the country that charge visitors less than five percent. Deputy Presiding Officer Steven Flotteron said that it was “only fair” for the tax to help fund the convention center considering how revenues from taxpayers in the western towns went to Eastern Long Island preservation efforts. Countering his argument was Bridget Fleming, a Noyac legislator who said she voted against the action because it almost doubles the tax and “is not fair to East End businesses.”

The bill, introduced at the request of County Executive Steve Bellone, was approved 14-3, with Fleming, Al Krupski and Anthony Piccirillo voting in opposition. The tax increase goes into affect June 1 if signed, as expected, by Bellone.

According to County Comptroller John Kennedy, Suffolk currently takes in about $11 million per year with the tax, revenue that is on top of the 8.625 percent sales tax imposed by the county. With the increase, the hotel tax hike is expected to bring in an estimated $20 million annually if tourism continues at its present rate. The tax is levied on any rentals of less than 30 days including motels, cabins, cottages, campgrounds, Airbnb’s, and Vrbo’s, as well as owners of homes, particularly in the Hamptons, rented for huge sums to celebrities and other well-to-do vacationers.

Part of the tax revenue will go to a special fund to support the convention center as part of the $2.8 billion Midway Crossing development. The behemoth project, sprawling across 179 acres, will connect the Ronkonkoma Long Island Rail Road Station and MacArthur Airport. Its 2.7-million square feet is planned for a myriad of scientific, entertainment and tourism space, including facilities for medical research and healthcare, a 300-room hotel and other residential, retail and commercial components. When fully built in an estimated 10-15 years, the project will produce $4.5 billion in total recurring annual economic impact, according to the Long Island Regional Planning Commission. The developers estimate that Midway Crossing will create 14,500 jobs, including positions in the STEM and healthcare fields, and yield $1.95 billion in total economic impact. The convention center itself will be subject to the hotel tax.

Discover Long Island, which promotes tourism to the region, will also benefit from the tax, while bulk of the monies will go to the county’s general fund where they will be earmarked for parks, historic sites, and the Vanderbilt Museum and Planetarium in Centerport, legislators said. The East End would see a piece of the pie with allocations to promote cultural programs, including funding dedicated to the five East End towns.

The comptroller’s office will be responsible for enforcing the collection of the tax and continues an effort to notify those who would be subject to it. “We’ve done a lot of work on information, education, enrollment, and frankly, enforcement,” Kennedy said. “I don't want to be a heavy hand, but if people choose to be in the business of rental and lodging, they have to pay the tax.” Kennedy said his office has about 1,200 entities set up to pay the tax so far from larger hotels to small bed and breakfasts.