BOMA votes 4-1 for hotel/motel tax; awaits state exemption
Farragut Board of Mayor and Aldermen is seeking state authorization to enact a hotel/motel tax to fund a tourism program.
The Board voted 4-1 during its meeting Thursday, Jan. 12, to approve a resolution requesting Tennessee General Assembly exempt the Town from the state’s law prohibiting municipalities from enacting the hotel/motel tax and allow the Town to levy the tax.
Alderman Bob Markli, who voted in opposition to the resolution, said, “I think [the tax] will be a real negative for the Town, especially if we want to promote tourism.”
Mayor Ralph McGill, Vice Mayor Ron Pinchok and Aldermen Louise Povlin and Ron Williams voted in favor of the resolution.
Town administrator David Smoak said the issue of a hotel/motel tax has been a priority of the Board’s for several years.
“Back in 1988, the [state] legislature enacted a law that said, basically, no hotel/motel taxes could be enacted from any city that had not already enacted them, and if the county [those cities or towns] are in already has a hotel/motel tax,” he said. “So over the years, since then, there have been 17 local governments that have requested authorization to be exempted from that law.
“The legislature has approved those,” Smoak added. “Over the last couple of years, the state has made some legislation in getting rid of the Hall Tax that we certainly rely on for funding, as well as the changes to the Improve Act that we actually get money dedicated for road improvements.
“Those moneys have come away from the general fund. All of that is in tune to more than a million dollars a year in revenues the Town is losing over the next two to three years.”
The hotel/motel tax authorization would allow the Town to enact a tourism program, Smoak said.
“Recently the Board has approved a budget for that, as well as a position, to get that program started,” he said.
“Then, we would bring [hotel/motel tax issue] back, assuming that the legislature approves the bill, to the Board of Mayor and Aldermen for you to actually approve the ordinance enacting that [tax] at that time. {State] Rep. Jason Zachary [R-District 14] and [State] Sen. Richard Briggs [R-District 7] have both — just today — filed legislation on our behalf to request that exemption to be in place.
After saying he talked to some state representatives, Smoak said, “This is something that committees will look favorably on.”
”Alcoa, Harriman, Kingston, Lenoir City, Morristown, Oak Ridge, Knoxville and Maryville all are municipalities that have hotel/motel taxes,” Povlin said. “We have already indicated that we are interested in having a tourism department, and I think this is a legitimate way to fund it.
“We are losing between $600,000 and $800,000 due to the [Improve Act]. That’s going to have a negative impact on us,” she added.
“I support this.”
After the meeting, Povlin said the Board needed to explore other opportunities to make up for the shortfall from the Improve Act changes.
“Our largest revenue source is the local sales tax,” Povlin said. “In 2016, we engaged the marketing services of Girl on the Roof to explore options to increase revenue from local sales tax.”
One of those options was tourism, she added.
“We have since developed a work program for a tourism coordinator, and we are actively searching for an experienced individual to fill this position,” Povlin said. “One of the main responsibilities of the tourism coordinator will be to identify and cultivate relationships with various entities to drive more visitors to stay in Farragut hotels to generate more sales tax in the businesses they will visit while staying in Farragut.
“The revenue received from a hotel occupancy privilege tax is intended to fund this tourism program,” she added.
Markli spelled out his opposition.
“I would like to say the fact that all those people around us have that tax, that drives people to our Town to stay here at our hotels because they are less expensive for the same facilities and bring business to our Town,” he said. “That which you penalize, you get less of. That which you support, you get more of.
“So, if we want more tourism, we don’t penalize it.”
