Tennessee tourism "at a crossroads" as federal funds run out
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Tourism in Tennessee has been booming for years, but state officials say they need $30 million in extra money to keep the momentum going.
Why it matters: Millions of dollars in federal pandemic relief money have greatly expanded the state Department of Tourist Development's budget since 2020. But that money is running out.
- If the state doesn't step in to replace the expiring federal funds in the next budget, the department says it will face a 60% cut.
What they're saying: "Our agency's at a crossroads," tourism commissioner Mark Ezell told Gov. Bill Lee in November. "We don't want to go backwards."
State of play: In fiscal year 2020, the Department of Tourist Development's budget was $21 million.
- A surge in federal funding that started during the pandemic more than doubled that total for years. It reached $57 million last year.
- The added money went toward expanded marketing, grants to help rural communities improve their tourism, and efforts to attract more international flights.
Yes, but: The Tourist Development budget could fall back to a baseline of $22.6 million in fiscal year 2025-26, which starts in July, unless the state fills the gap.
Zoom in: During a budget hearing with Lee, Ezell sought to make the case that $30 million in extra state spending would be a worthwhile investment that would pay off with a crush of new revenue.
By the numbers: Tennessee tourism has soared since the pandemic.
- In 2023, visitor spending generated $1.9 billion in state tax revenue, according to state estimates.
- That's an increase of about $600 million over 2018.
"We have a proven track record about what return can be generated with increased spending," Ezell said.
- "As we've used more budget to tell more people about Tennessee, the money is coming in."
The big picture: Many other state agencies are facing similar situations as federal pandemic aid winds down, according to Brandon Gibson, the governor's chief operating officer. But Gibson praised Ezell during the agency's Nov. 13 budget hearing for making "a business case for potential spending."
- "I don't know that a department has come in with as much data and dollars and cents to make an argument like you have that the investment makes a difference to the bottom line of the state budget."