March 10, 2014

Restaurant tax passes first reading

By Rob McDaniel
Staff Writer

LAUREL COUNTY, Ky. — The meeting room at London City Hall had standing room only Wednesday afternoon as the London City Council met for the first reading of an ordinance establishing a restaurant retail sales tax.

If the second reading of the ordinance also passes, it will establish a three percent restaurant tax used to fund tourism and tourism related events in London and Laurel County.

London is classified as a fourth class city, and is authorized by KRS 91A.400 to levy up to a three percent tax on restaurant sales to fund local tourism commissions. All money received from a restaurant tax must be turned over to the community’s tourism and convention commission. 

Currently around 16 percent of cities allowed to levy a restaurant tax have chosen to do so.  Although restaurant taxes accounted for only one percent of total tax collection, they provided $11.2 million in revenue in FY 2011.

London Tourism and Convention Commission Chairman Bill Dezarn said that the tax will generate an estimated $1.9 million and that the funds will be used to bring more business to Laurel County through tourism and events.  Dezarn also said that he and the city tourism commission plan to work along side the London-Laurel County Tourism Commission to make Laurel County a tourism destination.

Chris Robinson of London Downtown also supported the tax saying that it could be used to fund parks, sports fields, sports facilities, youth activities, sidewalks for pedestrians and cyclists, arts and entertainment, downtown development, seasonal community events or even hospitality training for restaurants, hotels and other businesses.

“As of 2013, 42 communities in the state have established a restaurant tax to benefit the community and promote tourism,” Robinson added.  “Many cities in our region have restaurant taxes including Corbin, with a three percent tax; Williamsburg, with a three percent tax; Mt. Vernon, with a three percent tax; Burnside, with a three percent tax; Berea, with a three percent tax; Barbourville, with a three percent tax; Pineville, with a three percent tax and Harlan with a three percent tax.”

Several concerned citizens asked the council how pending legislation with the Kentucky League of Cities would affect the tax.

“There’s legislation with the Kentucky League of Cities, they would like it where all cities would be able to do the three percent tax and not just the fourth and fifth class cities that are allowed to now,” said Jim Robinette, a local Dairy Queen owner.  “What they would also like to have is 75 percent that could go towards quality of life enhancements that has nothing to do with tourism.  Only a minimum of 25 percent would have to go to tourism.”

“We’re constantly being asked why we can’t get this, why we can’t get that,” London Mayor Troy Rudder said.  “It’s finances.  There’s an old saying in the tourism industry ‘we’re trying to get heads in beds,’ we’ll we’re trying to get feet on the street.  That costs money folks.  Every cent of this money will be used for tourism or tourism related events.  This is a way for Laurel County to move forward and get people to visit or even stay here.”

Jim Hays added that although he supports the proposed tax for the betterment of the county, if the Kentucky League of Cities’ legislation passes he would never support money designated to be spent solely on tourism going into the city’s general fund.

Councilmember Danny Phelps went on the record to say that he opposed the proposed restaurant tax for many reasons including increasing cost of living expenses, unfunded federal mandates and a mismanagement of funds in the past.

“The gas and utility bills have creeped higher as well as numerous fees and add-ons that are hidden in the monthly statements,” Phelps said.  “None of these are large increases, but when you add them up they amount to a big bite out of the paychecks of working people and folks living on fixed income such as social security or disability whose pay hasn’t kept up.”

Councilmember Judd Weaver “strongly opposed” the proposed tax saying that it is an unneeded burden and would be a “slap in the face” to his customers who are living in tough economic times where cost of living expenses are rising and people are struggling more and more just to scrape by.

After hearing all comments, for and against the tax, the city council voted.  In total three council members, Jason Handy, Nancy Vaughn and Jim Hays, voted for the tax.  Judd Weaver and Danny Phelps voted against the tax while Bobby Joe Parman abstained.  Mayor Troy Rudder also cast his vote in favor of the tax.

A date for the second reading has not been scheduled. If it passes the tax will become effective July 1.

The council also approved:

• The first reading of an ordinance accepting a street being named Jordan Drive.

• A resolution to exchange maintenance and ownership of various London roadways.

• The Council appointed Shelia Wittenback and Holbert Hodges to the Vacant Property Commission