Intergovernmental Committee Explores Revenue Options

Huntsville, TN (2015-10-26) The Scott County Intergovernmental Committee is poised to recommend the creation of an entertainment tax and an increase in the local hotel/motel tax.  Faced with a projected budget shortfall of up to $400,000 next year, the committee is exploring new sources of revenue to shore up the county’s ailing budget.

The Intergovernmental Committee met for more than an hour and half Monday night in an open discussion, round table format to consider the county’s alternatives for generating new revenue, including the creation of an entertainment or amusement tax on local recreational venues.  The body also discussed potentially doubling the current hotel/motel tax on overnight lodging.  The committee didn’t venture into the topic of leveraging another wheel tax.

The creation of an entertainment or amusement tax was at the forefront of Monday night’s discussions, as most of the nine Commissioners attending the meeting seemed in favor of the tax; largely because it would affect out of town visitors and not local property owners. While most voiced support of the idea, the committee wrangled over the best uses of the funds.  Earlier this year, the county legislative body shot down a proposal that would have created a 7.5% tax on entertainment venues.  In that draft, the money would have been earmarked for tourism, and various county departments and organizations including the road department, sheriff’s department, ambulance service, volunteer fire departments, and rescue squad.  While most continued to support those recipients, many wanted to have more flexibility, especially within those departments under the umbrella of the county general fund.  Ultimately, the body verbally agreed to a 30/30/40 division of funds, with 30 percent earmarked for both tourism and the road department, with the balance being placed into the county general fund.  The money in the county general fund would be subject to annual reallocation by the county’s budget committee.

While the body had earlier discussed a tax of up to ten percent, a couple of commissioners voiced concerns over assessing such a high tax, while others felt a higher tax would preclude local municipalities from leveraging its own tax on ticket prices.  After much discussion, the committee settled on an 8% assessment.

While the committee agreed Monday night on the basic components of implementing an entertainment tax, it had many unanswered questions.  Most pressing was whether or not the Tennessee legislature would pass a private act to allow the county to impose a tax without earmarking all the revenue to specific departments.

According to County Attorney John Beaty, Ben Rogers, the county’s CTAS representative would attend the committee’s regular work session on Monday, November 2, 2015 and provide some guidance.

While the majority of Monday’s meeting was consumed by talks about an entertainment tax, the committee also discussed a possible increase in the local hotel/motel tax.  Created by a private act in 1983, the county hotel/motel tax assesses a 5% premium on local lodging rentals, including hotels, motels, and cabins.  At the urging of Chairman Trent Cross, the body considered doubling the tax—a proposal opposed by Commissioner Mike Slaven who felt the tax may deter tourists from staying in Scott County.

With the recent growth in adventure tourism, the body felt campground rentals, especially rentals for camper trailers and recreational vehicles (RVs), should be included in the tax.  Currently, the county is not collecting on those types of rentals. After a cursory review of the local act, Beaty opined those rentals should also be subject to the current tax; however, further review and clarification were required.  With a renewed vigor, the committee decided to pursue the lost revenues from campground rentals, but stopped shy of recommending an increase in the hotel/motel tax.

“If we do all this, and we still raise taxes, they are going to run us out of town,” Commissioner June Jeffers said vicariously through Commissioner Slaven.

The committee will continue to explore its possibilities at its regularly scheduled work session next Monday.  The full county legislative body would have to act on any recommendations from the committee before those proposals are forwarded to the state legislature for its consideration.