Summer tourism season: Hope and uncertainty as N.J. rebuilds

TRENTON – New Jersey’s revenue growth was already struggling well before Superstorm Sandy arrived last year.

Hardly a month went by without the gloomy numbers being analyzed in a report by the Office of Legislative Services or the Treasury Department.

With Sandy having caused severe damage to popular boardwalks and summertime rentals of many of the state’s iconic beach locales, such as Seaside Heights and Belmar, the state’s tourism industry could suffer a big blow this summer.

On Monday, for example, the Assembly Tourism and the Arts Committee will take testimony on how the 2013 tourism season may be affected in the wake of Sandy.

Given the boardwalk reconstruction project in Belmar and the higher number of badges being sold in many communities, visits to the Jersey Shore could be higher in the summer of 2013 than one might expect.

That could help an array of businesses associated with tourism. Businesses most likely to benefit from a vibrant tourism industry include restaurants, transportation services, souvenir shops, apparel dealers, and gas stations, among others.

About half of the state’s $37 billion tourism industry is supported by Jersey Shore businesses and activity, analysts say.

Christopher Pike, a senior economist at Tourism Economics, said “it’s too soon to tell at this time” what impact the devastation from Sandy will have.

However, there is no denying there will be at least a short-term boost from  purchases of things such as construction materials for rebuilding.

Pike said how the state fares this coming season will depend on how much is rebuilt.

But Pike said that at the same time the Shore towns are undergoing rebuilding, there will be a need to fight the perception that the Jersey Shore will not be ready for the tourism season.

The danger, according to Pike, is that such a perception could lead some of the more “transient” element of the tourism population to stay away.

“There are certain perception issues to deal with,” the senior economist said. “When people see or think that their favorite boardwalk is destroyed, that’s a psychological barrier for more transient visitors. There’s a feeling that expectations aren’t met.”

To illustrate how much damage control needs to be done, Pike pointed out that Atlantic City had unveiled an ad campaign to correct misperceptions of some people who believe the city has been “wiped off the map”  by Superstorm Sandy. In fact, Atlantic City recovered faster than most other Shore towns, he said.

One of the determining factors for a successful Shore season will be seeing how many second or vacation homes survived or were rebuilt.

Being able to rent those homes out will be central to a vibrant economy in Shore towns, Pike explained.

The state’s tourism industry, especially its beaches, has long been a source of pride. It’s also been a financial boon, generating some $4.4 billion in state and local taxes as recently as 2010.

That translates to real savings for the state’s long-beleaguered property taxpayers, helping to relieve what would otherwise be even greater sticker shock. A report by the state’s tourism industry said that each home would need to pay another $1,380 if the tax revenues produced by tourism did not exist.

Another aspect of the tourism industry – casino gaming – continues to struggle.

Already battered by out-of-state competition, Atlantic City’s problems worsened following Sandy, when the casinos were shut down briefly.

Compared to November 2011, revenues languished at 28 percent lower in November 2012, from $244 million to $175.5 million, according to the state Division of Gaming Enforcement.

But Pike said he believes the southern Jersey Shore areas and the state’s sole casino gaming resort town will not suffer the same problems their northern counterparts might.

“From the anecdotal evidence I’ve seen, Atlantic City on down… Ocean City, Avalon, Cape May, all saw minimal loss of (summer) housing,” he said.

Having a successful tourism season provides another reason for why Congress should approve a bill for the remaining $51 billion in Sandy relief, as Phil Kirschner, president of the New Jersey Business and Industry Association, pointed out.

“The Governor is absolutely right, we need relief aid now,” Kirschner said in a statement following Gov. Chris Christie’s State of the State Address on Tuesday.

“We need to rebuild bridges and roads so the Jersey Shore can be open for business and we need financial assistance for damaged businesses to help cover what insurance and loans can’t. The longer we are forced to wait for Washington to act, the more it will hurt our economy… We need to be ready to go when the summer gets here.”

But given the volatile nature of most revenues in general, especially in recreation-related industries, it may be time to look for new sources to pay state government’s bills and help avoid gaps.

“We have to create new opportunities to generate revenue,” Speaker Sheila Oliver, (D-34), East Orange has said. “We’re not going to be able to squeeze any more water out of the lemons we have already.”

Oliver said the budget deficit could be as large as $2 billion if more is not done.

Recently, the State Budget Crisis Task Force of New Jersey issued a report saying New Jersey’s sales and income taxes tend to be more precarious than those in other states. It actually suggested a tax on two staples long tax exempt – food and clothing – in a way that wouldn’t hurt less well-off residents.

“The sales tax in New Jersey has a more limited base than it does in many states. If the base were broadened to include items such as food and clothing the state would raise an additional $2.5 billion.”

But it’s doubtful such a measure would receive Christie’s approval. He previously vetoed the so-called “millionaire’s tax,” which the Assembly Democratic leadership also said may be worth revisiting, given that Congress recently approved tax hikes for high-income earners.

Summer tourism season: Hope and uncertainty as N.J. rebuilds