Committee Recommends Entertainment Tax; Explores Taxing Campgrounds

Huntsville, TN (2015-11-02) The Scott County Intergovernmental Committee has recommended the Scott County Commission consider the creation of a tax on local entertainment venues.  The formal action followed a special-called work session last week during which the committee hammered out many details of the proposed new tax; however, the final recommendation differed slightly from the original plan.  The body also discussed the legality of assessing the county’s hotel/motel tax on area campgrounds.

The Scott County Intergovernmental Committee spent nearly an hour discussing tax revenues Monday night, largely focusing on the creation of an entertainment tax and broadening the scope of the county’s hotel/motel tax collection to include area campgrounds.

Wesley Robertson of the University of Tennessee’s County Technical Advisory Service (CTAS) fielded a host of questions from Commissioners Monday night; many of them concerning the legality of whether or not campers should have to pay the county’s hotel/motel tax.  Last week, County Attorney John Beaty opined the broad language in the private act that created the county’s hotel/motel tax in 1983 gave the county taxing authority over area campgrounds, despite some argument that campers were renting ‘space’ not rooms.  The conversation was a result of the Intergovernmental Committee’s consideration of raising the current 5% tax to as much as 10%.  Desperate to find new revenue, the committee was set to recommend the raise, but put off the idea after learning campers were not paying the tax.  Local officials thought the county could be losing up to an unsubstantiated $150,000 in annual revenue.

While the committee shifted its focus from increasing the tax to levying the tax on campers, some Commissioners also expressed fear that a rate hike would actually result in less revenue, as tourists might opt to stay in neighboring counties with lower tax rates.  “We see competition from Campbell County everyday,” commented Don Stansberry III, owner of Grand Vista Hotel in Huntsville.  Campbell County’s hotel/motel tax is currently 5%. “They would just as soon ride Royal Blue (and avoid the tax),” Stansberry added.

In the last few years, the county has collected about $50,000 a year in revenue from the hotel/motel tax.

By a 4 -1 vote with one Commissioner passing, the Intergovernmental Committee forwarded a recommendation to the county legislature body that it should consider the implementation of a private act to impose an tax on local entertainment venues.  An entertainment or amusement tax has been a topic of discussion for more than a year. In February, the county commission voted down the creation of the tax; however, of late, the idea has gained more support.

While there are several communities in the state charging an amusement tax, most of those acts predate the implementation of the state’s sales tax, which allows communities to assess up to 2.5% in local taxes on goods sold.  Since then, the state has only considered one such tax; a proposal by CoffeyCounty—host county for the annual Bonnaroo Festival. Ultimately, the bill was withdrawn from consideration after local officials struck a deal with festival organizers to pay for much of the county’s expenses.

Last week, the committee met for more than 90 minutes and ironed out both the proposed tax rate and the division of revenue from the tax. While the committee didn’t take a formal vote, the consensus of the nine commissioners who attended the meeting was an 8% tax with 30% of the revenue generated going to tourism promotion, 30% to the road department, and the remaining 40% being diverted to the county general fund for later distribution to the ambulance service, sheriff’s department and other justifiable expenses.

Monday night, at least two of the commissioners who attended the meeting objected to the division of revenue, arguing that funds should be dispersed differently.  “We discussed it, but there was no agreement,” challenged Commissioner Rick Burke.  Burke argued that the lion’s share of the funds should be appropriated for the county road department.  “Our problem is our roads,” he added.  As adventure tourism continues to grow, River Road and other access roads to the county’s two largest event venues cannot handle the volume of traffic.  “It’s not costing Scott County a lot of money on these concerts,” remarked County Road Superintendent Donald (Dick) Sexton.  Sexton argued his department spent more money than other county department, as the ambulance service was paid for its services, and the event promoters provided its own security.  Unlike the ambulance service and the sheriff’s department, the road department does not receive county taxpayer dollars to fund its operation.

Recently, the road department resurfaced a portion of Station Camp Road, which leads to the Big South Fork National River and Recreation Area.  “We’re helping the people of Scott County,” claimed Burke, who is an employee of the road department.  Since the park service opened the horse camps in the area, Burke claimed many local residents had been ran off the road by tourists who were pulling long trailers.

While the road infrastructure is adequate to handle event traffic, Sexton conceded the tax wouldn’t generate enough money to address all the problems.  Widening the roads (leading to Brimstone Recreation and Trails End Campground) would take millions of dollars, stated Sexton.

Ultimately, the committee recommended an 8% tax with 40% of the revenue going to the road department, 35% to the county general fund, and 25% for tourism promotion.  Commissioners Trent Cross, Patti Brown, Ernest Phillips, and Mike Slaven supported the measure.  Commissioner David (Blue) Day passed on the issue, while Commissioner June Jeffers cast the lone dissenting vote.  Commissioner Kenny Chadwell was absent.

If the proposition passes the Commission, the request for a private act would be sent to the state legislature for its consideration.  Senator Ken Yager has not officially weighed in on the request. If passed at the state level, the county would have to ratify the act by a 2/3rds majority vote before it became law.

The Commission’s next meeting will be held on Monday, November 19, 2015.