Hotel tax earmarks tourism, roads

By Holli Keaton (Contact) | Troy Messenger

Published Thursday, November 26, 2009

The Pike County Commission approved a local legislation in hopes of implementing a 2 percent lodging tax on hotels last year, but until Monday they had left one key question unanswered — what they would do with the money.

In Monday’s commission meeting, commissioners voted to make the resolution more final, planning to add 2 percent to the already 8 percent lodging tax in Pike County for the county road department and promoting tourism.

They have not earmarked exactly how those revenues would be split between the road department and tourism promotion but have decided both those areas would be the best use of funding.

Commission Chairman Jimmy Barron said the decision to promote tourism came in hopes of gaining support of local hotel owners, many of whom showed opposition to an increased lodging tax when it was originally presented last year.

“What they were saying is they would support it if there was money to go toward tourism,” Barron said.

County Attorney Allen Jones said there is not a set tourism organization the commission plans to donate to at this time, nor have they determined how much of the funds will go to tourism and how much will go to the road department’s needs.

“An amount will be determined budget by budget after consultation with hotel owners/operators, Troy University, the cities of Troy and Brundidge and the Chamber of Commerce,” Jones said.

The total lodging tax set not in the county is 8 percent, 4 percent coming from the city of Troy and another 4 percent from the state of Alabama.

The proceeds from Troy’s 4 percent tax go directly to the city’s tourism department.

“It pays for staff, promotions and retiree recruitment,” said Troy Mayor Jimmy Lunsford. “All the things we try to do are to put heads on our beds. It’s all designed to try to bring folks into Troy.”

Troy City Clerk Alton Starling said the city’s lodging tax was first implemented at 2 percent in 1988. It was increased to 4 percent in 2000, around the same time the tourism department was established.

In the last year, Troy collected around $231,000 in lodging tax revenues, down from the prior year’s approximate $248,000.

The county commission projects revenues could be around $110,000 a year, Jones said in a previous article in The Messenger. This is based on information gathered from local owners, approximated with an average occupancy of 250 rooms per night and rates of around $60, Jones said.

To put in perspective, the average hotel customer would pay about $1.70 more per room, based on a sample of hotel rates in Troy.

What the tax would do for the road department is assist with matching grant funds for a department that has had to make major cuts in its workforce and sell equipment in the last year to stay afloat.

“We’ve got to maintain our roads and bridges for the safety of the people in Pike County,” Barron said.

Though the commission has decided to make tourism funding a part of the agreement, some local hotel owners still haven’t warmed up to the idea.

“I still think it’s the wrong move at the wrong time,” said Stan Rutter, general manager of the Hampton Inn. “The last thing we need to do right now is put an extra burden on people.”

Commissioner Homer Wright, who spearheaded the lodging tax effort, has said the tax would be a good way to generate revenues in Pike County without directly impacting local residents.

Rutter disagrees.

“The whole thing is misguided because the perception is people from out of town will be paying. That’s not true,” Rutter said. “It touches so many businesses here in town.”

Beau Benton, chief operations officer for Larry, Blumbeg & Associates, which manages the Courtyard Marriott and the Hampton Inn, said their company is hesitant to support the tax just yet.

“It is difficult to support the increase in lodging tax without a definitive plan for the use of the additional revenue.  Our company has been supportive of similar increases in other jurisdictions, when the tax revenue was used to promote tourism.  We would welcome the opportunity to be part of the discussions,” Benton said.

Barron said the next step for the commission is to draft a resolution for the Alabama Legislature, and he said he anticipates hotel owners being a part of that process.

“We will try to get them to come back and give their input before a final draft of the bill is made,” Barron said.

Once the bill is drafted and meets final approval in the commission and is advertised in the newspaper, Rep. Alan Boothe, D-Troy, said he would present the bill to the legislature for a vote.

Then, Sen. Wendell Mitchell, D-Luverne would take it to the state Senate for last approval. In June 2010, the bill will be presented to the people of Pike County for a vote, and if passed, would then be implemented.

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