Lawmakers OK hotel-motel tax

The long-awaited state approval to assess a hotel/motel tax in Farragut has cleared yet another hurdle.

House Bill 1492 and Senate Bill 1503, which would allow Farragut to levy the tax, have both been passed by the Tennessee General Assembly. However, the measure still needs to be signed by Gov. Bill Haslam and approved by a two-thirds vote by the Farragut Board of Mayor and Alderman before it is enacted.

State Rep. Jason Zachary (R-District 14 including Farragut) confirmed the bill has been sent to Haslam for his signature.

Farragut Alderman Ron Williams shared the news of the bill’s approval recently at Town Hall, just as he had returned from a trip to Nashville.

“The House voted 90-3, and it went through the senate (on a) 33-0 vote,” he said. “It was pretty (easily passed), but it took quite a while,” referring to the fact the Town has discussed this issue for several years.

The bill, if approved by the Board, would allow a tax be levied on hotel/motel patrons not to exceed 4 percent.

Currently, Knox County’s hotel/motel tax is 5 percent, and the City of Knoxville levies an additional 3 percent tax. Loudon County has a 5 percent tax on lodging, and Lenoir City assesses an additional 5 percent tax.

“This will put us more in line with our neighbors,” Williams said.

The measure to assess the tax previously had come before the Board in 2013 and passed in a 4-1 vote on first reading but was tabled on second reading. The issue has been discussed intermittently since that time, especially since the Board has approved a part-time tourism director position (Karen Tindal was hired last month), which would be funded directly by the proposed tax.

“It will be good for the Town,” Williams said, noting that the state’s Hall Tax is being phased out while the recently passed IMPROVE Act has cost the Town some revenue, as it lowered sales tax on food.

“This (hotel/motel tax revenue) will have it’s own fund,” he said. “We have already hired our tourism director to attract more tourism, and that is what this is all about.

“Hats off to Jason Zachary in the House and (state Sen. Richard) Briggs (R-District 7 including Farragut) for the work they did,” Williams added. “They were the two that did the most, but (State Rep.) Roger Kane was helpful as well.”

Alderman Louis Povlin also was pleased with the news.

“A large percentage of the Town’s revenue is business generated,” she said. “With the changing nature of retail and the negative impact of the IMPROVE act on our budget, we need to explore, capitalize on and maximize every opportunity we can identify, if we wish to continue to rely on business-generated revenue as our primary funding source.

“One area we have not capitalized on in the past is with regard to the nine hotels in our Town,” Povlin added. “Hotel visitors produce secondary economic effects on the broader economy. We have started a tourism program and have hired a coordinator to work directly with the hotels. The intention is to gain a better understanding of the reasons visitors stay in Farragut and put into place programs and infrastructure to support attracting visitors to our hotels.

“Traditionally, a hotel/motel tax is used to fund that effort. The option to adopt a hotel/motel tax in the Town of Farragut is now available to us.”

While Mayor Ralph McGill, Povlin, Williams and Vice Mayor Ron Pinchok all have supported approving the tax, Alderman Bob Markli has been the consistent dissenting vote.