TheTimesTribune.com, Corbin, KY

Local News

March 21, 2014

Restaurant tax passes in London

Effective July 1 following ordinance publication

CORBIN — By LeeAnn Cain / Staff Writer

It will cost more to eat out in London beginning in July.

The second reading of an ordinance to establish a 3 percent restaurant tax passed five to two at Thursday’s meeting of the London City Council. Mayor Troy Rudder and council members Nancy Vaughn, Jason Handy, Bobby Jo Parman, and Jim Hays voted in favor of the tax while council members Judd Weaver and Danny Phelps voted against the tax.

The tax was implemented to fund the city’s newly-formed tourism commission.

City Clerk Carol Adams now has to publish the ordinance and the tax will go into effect July 1.

City Attorney Larry Bryson read the ordinance, which states the tax would be levied against any restaurant, with the exception of non-profit charitable organizations. Following the reading, Hays had questions about some of the details of the ordinance and how the city tourism commission is to work now that they have received funding.

“Once this money is given, does tourism come up with its own projects? Does it name and vote on them, or does the city have to approve them?” Hays asked.

“There are different answers,” Bryson replied. “Tourism must come to the city council if the project is on city property. For example, if tourism wanted to use downtown for a 5K the city council must approve.”

“If tourism spends its money in the city limits on property that is not owned by the city, will they still have to go to the council?” Hays asked.

“Possibly,” Bryson replied. “The tourism budget is annual, from July 1 to June 30. If they buy real estate, they cannot obligate their budget beyond the fiscal year.”

“I mean, for example, county tourism owns Heritage Hills. The city does not own it. If money is spent there, will city tourism still need the council’s vote?” Hays asked.

“If the event promotes tourism in the city, they can go ahead and do it if it’s in the budget. The city tourism commission has total control over their budget. The only reason city council would need to vote is if the event is on city property. It’s mostly for insurance purposes,” Bryson explained.

“An example would be the Chicken Festival,” Rudder said. “That committee has to go through the city. The real issue is the money, not tourism’s budget. They have to have money to make a budget and while the city has no control over their budget they do have some control over the money.”

“The city is already involved in tourism events,” Hays said. “Will the money from the restaurant tax go to subsidize it?”

“We’re hoping city tourism will take financial responsibility for some of our events,” Rudder said.

“I’m concerned about the money because none of us want to be accused of a bait-and-switch scheme like the lottery,” Hays said.

“Nobody in the city can use the money for anything but tourism,” Rudder replied. “We have checks on this; we have an annual audit.”

Rudder then mentioned the city and county cooperation with signs. In the last meeting of the London Tourism and Convention Commission, Co-Director of Laurel County Tourism Rodney Hendrickson requested members of the city tourism convention to assist him in distributing 60 signs for the United States Specialty Sports Association’s softball tournaments and city tourism agreed to help.

“Two heads are better than one. We’re trying to get more activities for the people. This is an example of the cooperation we were hoping for,” Rudder said. “County tourism is advising city tourism on how to operate. That is cooperation; they are working together”

“The only reason I’m for this tax is the fact that tourism is one of the most lucrative activities you can have in a county,” Hays said. “People come to town, spend money, and leave. You don’t have to provide them with services like school or health care. It’s basically free money.”

“Last year’s archery tournament filled hotel rooms across states,” Rudder said. “If the city could get in on it, it would affect every business in the city.”

“Do yearly budgets have to be approved by city council?” Phelps asked. “Do we have to release the funds from the tax to them?”

Bryson replied “no” to both questions.

“The tax money is going to be placed into a special account,” Bryson said.

“What happens if the tax revenue falls short of their budget?” Phelps asked.

“No public agency is supposed to spend more money than what is collected,” Bryson replied. “The city tourism has its own budget and its own audit.”

“Will city tourism hire its own director?” Hays wanted to know.

“Yes,” Bryson said. “But before any employment decisions are made I imagine they would want to consult with the mayor.”

“Can this ordinance be amended?” Phelps wanted to know.

“Some things can, but not anything that would fundamentally change the character of this ordinance,” Bryson said. “We can’t change the things in there that are state laws.”

Vaughn made the motion to approve the ordinance, and Handy seconded the motion.

This is the second time a restaurant tax has been proposed to the city council. The first time was in 2003, and according to state law all restaurant taxes must fund tourism activities.

In other city council news:

–Liperote Drive, a state-funded road that had been turned over to the city, will cost about $130,000 in material alone to fix. A 250-foot section of the road slid down a hill and as a result that section of the road is closed. According to Rudder, the closure blocks properties from people that want to develop them.

“We are in dire straits,” Rudder said.

The city has applied for state funds through a Municipal Aid Co-op, which provides the city with an emergency fund they can apply for if needed. Rudder hopes the funds will cover both materials and labor, although a labor cost has not yet been quoted to the city.

In order to receive these funds, Rudder needed permission from the council to fill out an application for the money and sign the relevant papers.

The motion passed unanimously.

–The council unanimously voted to accept Jordan Drive into the city road system. The deed will be conferred to the city by Ken James.

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