March 25, 2014

Restaurant tax passes second reading

Commission will take over fireworks and other city tourism activities

By Rob McDaniel
Staff Writer

LAUREL COUNTY, Ky. — Effective July 1, London will join the list of local cities that have implemented a three-percent restaurant tax to fund tourism and tourism type activities.  The decision was made in a 4 to 2 vote Thursday afternoon in a special called City Council meeting.

Council members Nancy Vaughn, Jason Handy, Billy Jo Parman and Jim Hayes voted for the tax, while Judd Weaver and Danny Phelps voted against it.

A restaurant is defined in the ordinance as “any fixed or mobile commercial establishment that engages in the preparation and serving of ready-to-eat foods in portions to the consumer including but not limited to grills, tearooms, sandwich shops, soda fountains, taverns, cocktail lounges delicatessens, roadside stands, street vendors, catering kitchens, commissaries, non-package ice cream and/or yogurt, service stations or similar places in which food is prepared for sale for consumption on the premises or elsewhere.

“It does not include school or food vending machines nor does it include any organization identified by the Commonwealth of Kentucky or the Internal Revenue Service as a non-profit or charity organization.”

Temporary food stands and street vendors, often seen at events like the World Chicken Festival, are not exempt from the new three-percent tax.

Funds will be maintained by the city treasurer in a special account and will be dispersed to the commission on a monthly basis, based on their budget.  The money must be used solely for recreation, convention and tourist activities and the maintenance of those activities.

In the future, City Attorney Larry Bryson stated the tourism commission will be required to make their audits public record and available to the city council.

“As a part of this ordinance, it does require the commission be independently audited and that the audit be made public record and that those records be made available to the city council,” he said.

Councilman Danny Phelps, who voted against the tax in the first reading, mentioned that the ordinance did not include anything about nepotism.  Mayor Troy Rudder  explained that would be part of their bylaws, once they are finalized. 

Rudder addressed rumors that the Kentucky League of Cities was seeking legislation to allow a portion of the restaurant tax to go into the city’s general fund for quality of life enhancements.

“Yesterday I talked to a KLC attorney who stays with the legislators every day and he said the bill was never filed,” Rudder said.

Rudder went on to explain that if the legislation ever is presented and passed, the city ordinance takes precedent over the legislation and if somehow the legislation was worded in a way to repeal the city ordinance, they could always change it.

“I can’t use any of that money; it has a separate audit every year. It’s something that has to follow the letter of the law,” Rudder added.

Councilman Jim Hayes agreed that the tax money should always be used for tourism and tourism only.

“I can say, for one, if that bill ever passed, I would be the first one to make a motion to have a reading to repeal the restaurant tax because that’s not what it’s for,” Hayes said.

The city will, however, ask the city tourism commission pay for tourism events the city has paid for in the past.

“I want to make it clear that I think all of us know that the city is involved in tourism activities already.  This money would go to subsidize.  I think it’s clear to everyone,” said Hayes.

Rudder gave some examples of tourism activities that the city has paid for in the past that would now be overseen and funded by the new tourism commission.

“Fourth of July Fireworks — that maybe a small example that costs us $35,000,” Rudder said.  “We’re going to ask them to take over some of those things.  And if they will, that will free up some general fund money for us to do some other things.”

Bryson explained that for any activities that involved city property, the tourist commission would need to come to the city council prior to developing or make improvements on the property. However, if they wish to spend money on non-city property, they have full autonomy to do so.

“If it promotes tourism in the city and the city tourism (commission) decided to spend money there, they can do that if it’s in their budget, (and) without council vote, because they have exclusive control of their budget on a year-to-year basis,” Bryson continued.

An example of this could be Heritage Hills, owned by the London Laurel County Tourist Commission, Hayes pointed out.

 The city and county commissions have already taken steps to work together, sharing a temporary director and asking for assistance to develop a budget.

“It’s what we promised, that we would try to work together,” Rudder said.  

The council also discussed road conditions on Liperote Drive, where approximately 250 feet of road had been washed out.

Rudder informed the council that repairs would cost approximately $130,00 but would be covered by road funds set aside by the state in an emergency fund. The city chose to participate in the state program earlier in case of such as emergency.

The board approved the Rudder’s request that the emergency funds be used to repair the damage.