Fiscal responsibility before new taxes

Published 9:52 pm Tuesday, September 23, 2008

To tax or not to tax; that’s the question facing Pike County Commissioners.

A proposed 2 percent lodging tax could generate as much as $110,000 in annual revenue for the county. But at what cost? Hotel owners say the proposed tax would raise consumers’ cost, perhaps to a breaking point. With an average room rate of $60 per night, consumers already pay $4 for the 4 percent state and 4 percent city lodging taxes. The additional county tax would add an additional $2, effectively making the rate $62 per night. That’s enough, some hotel owners warn, to drive consumers out of Pike County and into places such as Enterprise or Ozark.

If — and this is a big “if’” — Pike County needs to generate additional revenue by levying any additional taxes, a lodging tax is the least offensive to pass. The burden of the tax truly is passed to non-residents of the county. And, with revenue projections based on a 50 percent occupancy rate among the county’s nearly 500 hotel rooms, the lodging tax provides a reasonable avenue for growth, either through efforts to increase occupancy rates or by building additional hotel rooms.

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But we think there are other issues to consider in this debate, key among them the fiscal responsibility of the Pike County Commission.

Commissioners have yet to fully explain what they would do with the additional revenues generated by a lodging tax. Would they use the money to reduce the county’s debt burden? Would they pass funds along to agencies operating in the county, such as 4H or the Pike Animal Shelter? Would they use it to supplement the road department? Would they pass it along to county employees, in annual cost-of-living pay raises?

Just last year, the commission gained about $750,000 in additional revenues from a 1-cent sales tax reallocation. That’s a significant amount of additional revenue, and the jury is still out on whether the commissioners are spending that money wisely.

Earlier this month, commissioners voted – in a split decision – to raise their discretionary funds from $2,000 each last year to $4,600 each this year, a 130 percent increase in one year. That’s not the type of fiscal responsibility that encourages taxpayers to pony up more cash, even if it is coming from non-local sources.

Instead of debating the merits of a lodging tax, commissioners need to be debating the merits of fiscal responsibility, debt reduction and good, old-fashioned accountability to the public.