Department of Tourism
The Department That Doesn't Ask For Money
Tourism funds itself from the hotel room tax. Six years of budget records show far more coming in than going out — and a fund balance that crossed $113 million while vendors waited to be paid.
Every other executive department in the territory goes before the Legislature each summer and argues for a share of the General Fund. The Department of Tourism does not. It is financed almost entirely by the Tourism Advertising Revolving Fund, which receives 100 percent of the hotel room tax.
As the Commissioner of Finance told senators during FY2027 budget review in June, the Department of Tourism does not draw from the General Fund and relies on its own revenue to cover vendor contracts, marketing, grant matches and special events.
That arrangement has produced an unusual situation.
Tourism Advertising Revolving Fund balance as of March 31, 2023. After requisitions, payments in process, encumbrances and unobligated budget were deducted, $77,632,622.71 remained available for the FY2024 budget.
In the same period, the department was carrying unpaid vendor bills.
Five numbers, all called "the budget"
Conflating them is the most common error in coverage of this department.
- Requested
- What the Commissioner asks for in testimony
- Recommended
- What the Governor's executive budget proposes
- Appropriated
- What the Legislature actually passes into law
- Expenditure
- What the department actually spent
- Collections
- Hotel room tax revenue flowing into TARF — a different thing entirely
FY2025 shows why this matters. Commissioner Joseph Boschulte testified to a request of $34,441,073. The approved figure was $39 million. Both are true statements about "the FY2025 budget," and they differ by roughly four and a half million dollars.
Every figure below is labeled by type. Where VIIQ could not confirm a category, the cell says so rather than guessing.
Department of Tourism, FY2022–FY2027
| Year | Amount | Type | Source |
|---|---|---|---|
| FY2022 | $11,091,760 | Actual expenditure | Post Audit, FY2024 hearing |
| FY2023 | $30,097,941 | Appropriated — Act 8636 | Post Audit, FY2024 hearing |
| FY2024 | $34,276,030 | Gov. recommendation | Post Audit, FY2024 hearing |
| FY2025 | $34,441,073 | Requested | Budget Committee, June 2024 |
| FY2025 | $39,000,000 | Approved | Cited in FY2026 testimony |
| FY2026 | $39,000,000 | Recommended | Budget Committee, Aug. 2025 |
| FY2027 | — | Not confirmed | Hearing June 2026; figure unpublished |
Where the FY2024 recommendation went
Eighty-seven percent of the department's budget sits in a single line. By activity center, Public Relations and Advertising accounted for $30,994,791 — 90 percent of the total. Administration and Management took 6 percent, Tourism Administration 2 percent, the Visitors' Bureau 1 percent, and Offshore Activities 1 percent.
The FY2024 contract listing totaled $7,846,475, the largest single item being a $5,000,000 advertising and promotion contract with Miles Partnership LLP, followed by $2,100,000 for a public relations agency allotment. The department reported 40 positions with 18 vacancies — 11 on St. Thomas, 7 on St. Croix — in FY2025 testimony.
Where the money comes from
The Tourism Advertising Revolving Fund was created by Act 5249 and codified at Title 33, Section 3072 of the Virgin Islands Code. It is administered by the Commissioner of Finance and consists of legislative appropriations, gifts and bequests, and 100 percent of hotel room tax collections.
The hotel room tax was enacted July 13, 1978, as part of the FY1979 executive budget. It has been raised five times:
| Year | Rate | Act |
|---|---|---|
| 1978 | 5% | 4155 |
| 1983 | 6% | 4877 |
| 1986 | 7.5% | 5172 |
| 1994 | 8% | 5954 |
| 2015 | 10.5% | 7767 |
| 2015 | 12.5% | 7767 |
The current rate is 12.5 percent of the gross room rate, including add-ons such as energy surcharges and maintenance fees. Time-share estates are taxed separately at 10.5 percent.
The 100 percent share was supposed to be temporary
Originally the fund received half of hotel room tax collections. Act 5394 raised it to 65 percent in 1989 and capped annual deposits at $6.5 million. Act 5498 removed the cap in 1990 and set the share at 100 percent — but only for that fiscal year.
Acts 5624, 5721, 5897 and 6092 each extended the full share two years at a time through FY1997. What began as a one-year measure, renewed one budget cycle at a time, is now the department's permanent financial architecture.
Collections have kept growing. The Governor's financial team projected hotel and non-hotel taxes rising from $64.44 million in FY2026 to $68.62 million in FY2027, roughly 6 percent.
The carve-outs, and the money that didn't move
The statute does not send every dollar to marketing. Title 33 § 54 requires that each fiscal year, from hotel room tax collections:
- $1,000,000minimum into the Agriculture Revolving Fund, by June 30 each year
- $1,000,000minimum for developing and promoting sports tourism
- $500,000minimum to the Department of Education for interscholastic athletic competition
- $500,000minimum to the Department of Sports, Parks and Recreation
These are floors, not ceilings, and they are mandatory.
They have not always been met. The Office of the Virgin Islands Inspector General examined the Agriculture Revolving Fund and found that from 2016 through 2021, Agriculture did not receive $4,125,000 it was owed — including $2 million from the Tourism Revolving Fund. The IG attributed part of this to Agriculture officials not making timely requests for their annual allotment.
That framing deserves scrutiny. A statutory floor written as must be deposited is not obviously conditioned on the receiving agency asking nicely. Whether the obligation to transfer sits with Finance or with the requesting department is a question the Legislature has not resolved publicly — and $2 million went undelivered while it went unasked.
The KPI problem
The Post Audit Division's FY2024 analysis reproduced the department's own key performance indicators across five activity centers — media placements, ad value, impressions, sales calls, collateral distributed, travel agents trained, cruise passengers, overnight guests.
Every reported result was zero.
The Post Auditor's written comment noted that several KPIs were listed and that to date it appeared no real progress had been made, and suggested attaching timelines to them.
A department spending 87 percent of its budget on a single "other services and charges" line, with 90 percent flowing to public relations and advertising, reporting no measured results against its own targets, is not a scandal on its face. Marketing outcomes are genuinely hard to attribute, and the indicators may simply not have been populated at the time of filing. But it does mean the largest discretionary marketing budget in the territorial government was, in that filing, unaccompanied by evidence of what it bought.
The vendors
Through the period of record collections, the department has been repeatedly questioned about paying the people who work for it.
In June 2024, the Virgin Islands Consortium reported record-breaking tourism gains shadowed by roughly $6 million in unpaid vendor bills. In October 2025, senators were still pressing the department on approximately $1.3 million in outstanding invoices, and requested a line-item accounting of how the FY2025 $39 million had been spent, a timeline for clearing the invoices, and a breakdown of vacancy savings. Senators also asked about escrow accounts held by the Division of Festivals on each island and a clearer process for paying festival vendors on time.
The Tourism-specific question is narrower and sharper. When the fund holding your money has a nine-figure balance, why is anyone waiting?
What VIIQ has asked
| Question | Directed to | Status |
|---|---|---|
| FY2024, FY2026, FY2027 final appropriations | Office of Management & Budget | Pending |
| Current TARF balance and unobligated balance | Department of Finance | Pending |
| Annual TARF accounting required by § 3072 | Department of Finance | Pending |
| Whether § 54 carve-outs were funded FY2022–FY2026 | Finance / Agriculture / Education / DSPR | Pending |
| Line-item accounting of FY2025 expenditure | Department of Tourism | Pending |
| Outstanding invoices and average days to payment | Department of Tourism | Pending |
The statute already requires one of these. Title 33 § 3072 directs the Commissioner of Finance to forward annually to the Governor and the Legislature a detailed accounting of disbursements from the fund and the unobligated balance. If those filings exist for FY2022 through FY2026, they answer most of this page. If they don't, that is the story.
The bottom line
The Department of Tourism is the best-funded marketing operation in the territorial government and the only major department that never competes for General Fund dollars. Tourism drives more than half the economy, the collections supporting it have hit records, and the argument for spending aggressively on airlift and destination marketing is a serious one.
But a self-funding department is also a department with weaker external checks. It does not face the annual General Fund scramble that forces other agencies to justify every line. Its budget arrives largely pre-committed by statute. And in the one year where expenditure and collections can be compared directly in the public record, it spent under a quarter of what came in while accumulating a balance that crossed $113 million.
That is not evidence of wrongdoing. It is evidence that nobody outside the building has a clear picture — and that the accounting the law already requires would settle it.
Sources
- Legislature of the Virgin Islands, Post Audit Division, FY2024 Budget Hearing: Department of Tourism, June 7, 2023
- Legislature of the Virgin Islands, budget hearing releases: FY2024 (June 2023), FY2025 (June 2024), FY2026 (August 2025), FY2027 (June 2026)
- Virgin Islands Code, Title 33 § 54 (hotel room tax) and § 3072 (Tourism Advertising Revolving Fund)
- Acts 5249, 5394, 5498, 5624, 5721, 5897, 6092, 7767, 8153, 8636
- Office of the Virgin Islands Inspector General, Agriculture Revolving Fund funding sources and usage inspection report
- Bureau of Internal Revenue hotel room tax collection figures, as reported in Post Audit analysis
- Virgin Islands Consortium, tourism budget and vendor payment coverage, June 2023 and June 2024
- Virgin Islands Daily News, FY2024 budget hearing coverage, June 13, 2023
- St. Thomas Source, "Questions Swirl In Apparent Tourism Budget Spat," December 6, 2023
- V.I. Department of Tourism, departmental history, dot.vi.gov