Lodging tax debate continues

Published 7:28 am Sunday, November 23, 2008

A lodging tax passed by the Pike County Commission last week has local hotel owners concerned and not just for themselves.

“The largest portion of hotel nights are produced by businesses and industry in the city and in the county,” said Stan Rutter, general manager of the Hampton Inn. “My statement to the county commission was (that) it’s a common mistake to say adding a lodging tax won’t impact local residents because in fact, that’s exactly wrong.”

In their first meeting after the election Nov. 12, commissioners approved a resolution for a 2-percent lodging tax on all local hotels, but just barely.

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With a 3-2 majority, Democrat commissioners Homer Wright, Charlie Harris and Ray Goodson voted for the resolution, while Republicans Jimmy Barron and Robin Sullivan voted against. Newly elected Republican Karen Berry abstained from voting, saying she didn’t have enough information to make a decision either way.

The tax won’t pass without support of local legislators, as any new tax has to be approved by the state Legislature and possibly voted on by the people of Pike County.

Sen. Wendall Mitchell, D-Luverne, said the lodging tax hasn’t been discussed with him yet, so he isn’t certain whether he supports it.

“I won’t have any comment on it until I hear from them,” Mitchell said, referring to the commissioners.

Rep. Alan Boothe, D-Troy, also said he would refrain from commenting until he spoke with the commission.

District 1 Commissioner Homer Wright, who originally proposed the lodging tax, said it is on hold until the commission meets with Boothe and Mitchell.

While taxes typically have to be voted on by residents before passing, some taxes can be approved only by the Legislature. Wright said the commission will seek the latter route.

“We’re looking at not having to vote on it because that would save money,” Wright said, since a separate election would cost the county around $30,000.

Wright said he supports the lodging tax because it would generate revenues without directly imposing new taxes on Pike County residents.

Rutter, however, said he is concerned how local business would be affected when they bring in employees to work short-term.

“Nobody’s business needs extra expense right now,” Rutter said.

And he wasn’t the only one.

Bob Patel, an employee at the Scottish Inns, said the majority of his

customers are local.

“We have local customers, and they say no, they don’t want it,” Patel said.

Patel said at busy times of the year, all hotels have plenty of business, but in hard economic times, they are struggling to fill up.

In Troy, based on a sample of hotel rates, the average room costs $72.15 at current tax rates. If a 2-percent lodging tax was approved, an average of $1.70 would be added on to that number, to total $73.85.

Right now, hotels charge an 8-percent sales tax with revenues divided equally between the city and the state. Some hotel owners said they were concerned a

10-percent total tax would drive business to neighboring towns.

Some towns that neighbor Troy do have lower tax rates: Ozark, at 9 percent, and Enterprise 6 percent. However, Dothan’s rate is 10 percent and Montgomery’s is 12.5 percent.

While there’s no way to know for certain, Wright said the lodging tax could generate anywhere from $75,000 to $125,000 each year.

Rutter said he further opposes the tax because he doesn’t know how the funding would be earmarked.

Wright said the commission hasn’t made a decision on where the funding would be alloted, but some ideas are the road department, the general fund or excess for matching grants.

“It’d be there for whatever it’s needed for,” Wright said.