Bill would require hotel tax hike to be spent on tourism

Hank Hayes • May 1, 2007 at 8:24 AM

Legislation considered by Tennessee lawmakers on Tuesday would require revenues from newly passed hotel/motel tax increases to be spent directly on promoting tourism.

The Tennessee Hotel & and Lodging Association (THLA), which bills itself as representing the interests of the state's second-largest industry, is the legislation's biggest advocate.

"Local governments should not be permitted to continually tax a single industry as a matter of political convenience. ... We ask that you vote to pass this legislation," THLA CEO Walt Baker told lawmakers on the Senate Finance Committee.

The bill is sponsored in the Senate by state Sen. Joe Haynes, D-Goodlettsville, and in the House by state Rep. Craig Fitzhugh, D-Ripley.

Action on both the Senate and House versions of the bill was deferred in committees for one week to give localities time to give feedback on the measure.

"I'd like locals to make decisions about their own situations," said state Sen. Diane Black, R-Gallatin. "It almost feels a little bit uncomfortable that we're saying to locals ‘Here's how we expect you to expend your funds.' ... Each community is so different."

Baker pointed out that occupancy tax revenues were originally intended to promote travel and tourism, while visitors' spending would help pay for increased and higher quality local services.

"We fully appreciate the increased pressure on local governments to find resources to provide the services required by the local citizenry," he told the committee. "However, by not spending these designated taxes to grow tourism, as was the intention of the original (occupancy tax) legislation, they are hampering the ability of Tennessee's second-largest industry to promote itself."

Baker suggested much of the concern surrounding proposed new occupancy tax measures is coming from the state's smaller communities where "there is significant hotel growth."

In this year's wish list of policy proposals, Tri-Cities government officials told lawmakers they wanted the option of increasing hotel/motel taxes.

Lt. Gov. Ron Ramsey, R-Blountville, introduced a private act on Monday to increase Kingsport's occupancy tax from 5 percent to 7 percent pending approval from a two-thirds vote by the Board of Mayor and Aldermen. State Rep. Mike Harrison, R-Rogersville, successfully pushed through a similar occupancy tax increase in the General Assembly earlier this year for the town of Rogersville pending local approval.

Baker said that after local government leaders in Dickson passed a hotel tax increase to supplement the city's reserve fund, one local hotel showed a "30 percent drop" in revenues.

For more information about the occupancy tax bill go to www.legislature.state.tn.us and click on "Legislation." The bill's number is SB 1366.

For more about THLA go to www.thla.net.

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