Election politics could stall hotel-motel levy

COLUMBIA (MCT) – Columbia officials are concerned election-year politics could prevent the city's hotel-motel tax proposal from advancing in the state legislature.
Mar 16, 2014

COLUMBIA (MCT) – Columbia officials are concerned election-year politics could prevent the city's hotel-motel tax proposal from advancing in the state legislature.

Columbia City Council voted unanimously to send a proposal to the state allowing the city to add a tax to hotel and motel rooms. She said the tax must be approved by the legislature, which is done routinely for other municipalities.

The hotel-motel tax would allow an additional 5 percent to be added to bills for hotels within the city limits. The funds the tax would generate could then be used by the city for projects in tourism districts. The city could use it for downtown renovation, economic development projects, parks and recreation development or extending fire and police services.

"To me, we have a specific need for this because we have infrastructure projects, and we deserve equal rights of other cities," Councilwoman Debbie Matthews said. "These taxes are normally for people coming into our town and using our facilities"

The city has already spent several million dollars expanding utility lines to allow for the development of hotels and motels along Interstate 65, Matthews said. She said it also costs the city money to send fire and police personnel out to the areas around Exit 46. Currently, these funds come out of property taxes, but she said the hotel-motel tax could provide a new funding source.

Ideally, Matthews said the city would like to see legislators push the approval of the tax through as soon as possible. However, the politics of an upcoming state election has made Columbia's application for the tax hit a snag.

Playing politics

State Sen. Joey Hensley, R-Hohenwald, said he is supporting a version of the proposal in the Senate while Reps. Shelia Butt, R-Columbia, and David Shepard, D-Dickson, are supporting a similar measure in the House. Hensley said some members of the House are pushing back against all hotel-motel tax proposals, including Columbia's.

"All of these are proposals people have to vote on and must pass through the Senate and House like any legislation," Hensley said. "There are several cities doing this to try and increase taxes, and several people on committees, particularly on House committees, don't want to raise taxes anywhere. Of course, this isn't raising taxes but just letting the city council vote on it, which they would have to do to approve it. "

Hensley said some lawmakers are discussing a proposal to limit how much hotel-motel tax a county and town can levy, because many cities are asking for increases to their tax levels, Hensley said.

Shepard said he did not foresee the anti-tax sentiment when the bill was originally filed.

"I didn't have any problems passing the one for Dickson," Shepard said. "I was shocked with all the push back we got for this one. By the time we got the bill filed, the other side had already been campaigning against it."

Matthews said some of the political leaders who are unwilling to support the tax for Columbia represent cities that already benefit from similar taxes.

"Murfreesboro has it, Franklin has it, Dickson has it, Nashville has it and Memphis has it," she said. "Comparable cities of our size have this. They use this pot of money generated off their hotel-motel tax, but we don't have one."

The University of Tennessee's Municipal Technical Advisory Service records show Maury County has a 5 percent hotel-motel tax rate. Rutherford County's hotel-motel tax is set at 3 percent with the city of Murfreesboro charging 2.5 percent on hotel-motel taxes. Williamson County's tax rate is at 4 percent, with the cities of Franklin and Brentwood both charging an additional 4 percent. Dickson County's hotel-motel tax is at 5 percent with the city of Dickson's rate also at 2.5 percent.

Other lawmakers are getting pressured by state party leaders to vote against the addition of the new tax, which Matthews feels goes against their duty to their constituents.

"This is just a political knee-jerk reaction," she said. "They are not thinking of Maury County. They are getting pressure from their party and not the people they represent, and you cannot serve two masters."

Matthews said she feels lawmakers who are against providing the tax to Columbia should revoke it from other cities as well in the interest of fairness, including Rep. Joe Carr, R-Lascassas, who is running against U.S. Sen. Lamar Alexander in an upcoming election.

"Rutherford County and Mufreesboro enjoy this tool," she said. "If they are truly against this tax, they should revoke it for Rutherford County and Murfreesboro. Columbia should receive equal representation under the law."

Messages left with Carr were not returned as of Thursday evening.

Industry opponents

Anti-tax legislators are not the only people who oppose allowing more taxes on hotels and motels, Hensley said.

"There is concern and real opposition to this by the hotel-motel industry and the tourism industry," Hensley said. "They believe some motels will not want to locate where taxes are higher. They feel this will cost motels business when they pay 20 percent tax in one town and can go on down the interstate to another town and only pay 10 percent or 12 percent tax."

Darlena Blocker, general manager of the Hampton Inn off of Exit 46 in Columbia, is one such opponent of the tax. Blocker said the hotel, which opened in August 2001, already pays a 14.5 percent tax rate and she feels any additional taxes would be "ridiculous."

"They want to use it to renovate the downtown, but that won't bring business to my hotel," she said. "My main objective is that we already have a high tax rate. It's too much already."

Blocker said it is already hard enough for her to compete with the low rates charged by hotels over the state line in Alabama, about 50 miles away.

"Customers may go further south into Alabama where they pay less," she said. "In Athens, Ala. – which is 65 miles from here – the tax rate is only 12 percent. City leaders feel $8 or $9 more doesn't make a difference, but it does make a difference. You don't see that unless you are behind the front desk."

Shepard said he believes the majority of the push back is coming less from individual hotel owners and more from the tourism industry as a whole.

"The industry got wind that these bills would advance, got out early and talked to legislators to get them to say they were against higher taxes," Shepard said. "The hotel owners said this would put tax rates on rooms at 19.5 percent, which is higher than anyone else in the country."

Lawmakers are hoping negotiating with local hotel owners will help the tax bill pass, Shepard said.

"It is not dead yet," he said. "We have talked with legislators and asked if we were to talk and negotiate with our local hotel owners if they would give us a positive vote. I know of at least two that are agreeable to this. We will keep fighting for this."

Despite the opposition and his own misgivings about creating additional taxes, Hensley said it is his responsibility to pass the legislation on from local government to the state for approval.

"I have personally always voted against taxes, because that is how I feel," he said. "However, the city council has asked for us to present this, and we want to support local government. We are working hard to get this passed, but it will be a hard thing to do."

Log in or sign up to post comments.