ASHEVILLE – Buncombe County commissioners passed a lodging tax increase Tuesday on a 4-3 vote that split parties and intensified arguments over how to tax tourists.
Voting yes for the 50 percent rise in the hotel occupancy tax were two Democrats (Chairman David Gantt and Commissioner Ellen Frost) and two Republicans (Vice Chairman Joe Belcher and Commissioner Mike Fryar).
Commissioners voting no were Republican Miranda DeBruhl and Democrats Holly Jones and Brownie Newman.
The split reflected arguments building in the community over the tax that is paid by hotel guests and controlled by an appointed body whose majority are hoteliers, the Buncombe County Tourism Development Authority. The increase, which will go into effect in November, is expected to generate an additional $5 million, bringing total tax revenue to $14 million. The authority will spend all of that on marketing and projects to boost hotel business.
Hoteliers said the 4 percent tax needed to be raised to 6 percent because of the large number of new hotels being built in the county. The money would be used for more marketing. That would bring more hotel guests and help fill the growing number of hotel rooms, they said.
In voting yes, Gantt pointed toward tourism’s central role in the economy. Tourists spent $1.7 billion in the county in 2014 and supported 25,000 local jobs, according to authority numbers.
“I just think it’s a huge economic engine we have to respect,” the chairman said.
But opposing commissioners, such as Newman, said a bigger piece of the tax revenue should go toward streets, sidewalks and other public projects that help residents. Currently, 25 percent of the tax revenue goes toward projects that boost hotel business. Some of those also have a public benefit. They include sports fields and U.S. Cellular Center renovations.
“I think there would be very strong community support for this if there was a more equitable distribution,” said Newman, a 2016 candidate for chairman.
Members of the public spoke for and against the tax increase and included residents, small business owners and a representative from the Grove Park Inn, the region’s second biggest employer.
The local hotel room tax was created in 1983 by the General Assembly and set at 2 percent. Over the years, the state legislature raised the tax until it reached 4 percent. Hotel guests pay the tax on top of regular sales tax.
Most recently, hoteliers asked lawmakers in Raleigh to bump up the tax again and to make other changes. Those included forbidding for-profit entities from getting project money and increasing the authority by two members. According to the new law, county commissioners had to take the final vote on raising the tax.
Already, 31 counties around the state have six percent occupancy taxes. Fryar and Belcher said they supported the tax hike because it wouldn’t be paid by local property owners.
“We’re talking about money that is just laying there,” Fryar said.
The Republican commissioner rejected the idea that pressure should be put on hoteliers or the legislature to send more of the money toward Asheville and its downtown.
Belcher said local governments such as the county or Asheville could apply for project money. Authority staff said they are creating a process where applicants such as local governments with large projects of more than $5 million can apply any time of year instead of following a more rigid timeline currently used. They can also get special consideration for multiyear funding.
Belcher used the example of the $2 million in room tax money that went to the Enka ballfields.
“If that application is made to the Tourism Product Development Fund and they agree to it, then we don’t have to fund it on the backs of property tax payers,”
But DeBruhl said the legislation didn’t guarantee special consideration for local governments. Giving more attention to public projects was a promise by the authority but wasn’t part of the law, she said.
“What is in writing is a tax increase on our friends and family who come to visit us. And that’s upwards of $5 million. And I don’t want to have any part of it.”
Frost said she, too, wanted more money for public projects. But she said the legislature has been hostile to Asheville and the county, passing laws that limited their authority. The current law, which would increase project money, was probably the best they would get, she said.
“I think saying the legislature is going to do better for us — it’s not going to happen, sadly.”
Jones criticized the legislative process that led to the tax increase, calling it an “end run.” Local elected officials had approached the authority, asking that it help them change the law to allow some of the money to go toward nontourism projects such as affordable housing. But tourism officials instead worked with legislators to increase the tax for the hotel business.
Jones, a candidate for lieutenant governor, said hospitality meant being friendly and kind toward guests.
“It’s clear the people of this community and the people elected to represent them were not treated very hospitably.”
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