Officials say restaurant funds OK to use in parks

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By Ben Carlson

The city of Lawrenceburg can use its portion of a proposed restaurant tax to enhance its parks system, city and tourism officials insisted Monday.

That stance contradicts statements made last week by a tourism official who said using tourism money that way is improper, a position shared by the president of the Kentucky Restaurant Association, who said cities frequently use the money improperly.

City and tourism officials here made their statements during a city council work session to discuss a 3 percent tax on restaurants. The tax would raise $320,000, according to the Kentucky League of Cities, which would be split between the city and Anderson County Tourism Commission.

The city council received a presentation from tourism officials who claimed the tax would raise millions of dollars in revenue by attracting visitors and directing those already visiting to local attractions and restaurants.

Most of the discussion that followed the presentation focused on how the city could use its share of the money, which Mayor Edwinna Baker said in a previous city finance committee meeting could be used to maintain and enhance the city's parks.

Bert May, former mayor of Mount Sterling and a lobbyist for the League of Cities, recounted how, under his leadership, Mount Sterling enacted the restaurant tax in 1990 and used a portion of the funds to build a 68-acre park.

"That can be a pretty gray area," said May, commenting Tuesday morning on how Lawrenceburg might use its share of the money.

"The city can do anything if it can justify that it will bring people in, eat at restaurants and shop at stores. The thing is that cities face lawsuits from anyone who wants to sue them if they don't spend the money properly."

May said the statute that governs how cities can use restaurant tax funds allowed recreational and tourism uses when Mount Sterling enacted the tax in 1990.

He said the statute was revised later that year to exclude recreational uses, but allowed cities already collecting the tax to continue funding recreation projects at their previous levels.

"The law was written to protect cities from using this [the money] for recreation," he said.

During the meeting, Councilman Ken Evans questioned whether the city's portion of the funds could be used to construct a swimming pool similar to the one that used to be at Legion Park, not a $4 million-plus aquatic park that was proposed last year by a pool committee.

The next day, May said precedent exists for such an idea.

He said around 2002, the statute was changed to allow "tourism-oriented" recreation after Williamsburg officials wanted to use restaurant tax revenue to construct a water park.

"Obviously that's a tourism draw," May said. "It does bring people to spend the night, eat in restaurants and shop there."

Making a presentation for the tourism commission were chairman John Rhea and chairman elect Craig Stratton.

Stratton again called the tax a "pass through" tax and emphasized that restaurants won't have to raise their prices.

Rhea called it a "voluntary tax" that only those who choose to eat at restaurants would have to pay.

Their presentation included a series of economic impact scenarios, including one that claimed that the average day visitor spends $50 per day and that the average overnight visitor spends $120 per day.

Based on what Rhea said are 30,000 annual visitors a year to the county's two distilleries, day visitors if lured into the city, would spend $1.5 million a year.

May, the former Mount Sterling mayor, said the tax has been a boon for his city since it was enacted in 1990.

He said restaurant receipts have risen from $11 million then to about $25 million now, adding that since it was enacted 18 years ago, large chain restaurants including Cracker Barrel and Applebee's have opened in the city, located just off Interstate 64 west of Winchester.

He said at the time the tax there was being debated, its biggest opponents were restaurants.

"You can see how it's destroyed their businesses," he said.

He said the park built with the tax money has also been a boon to the city's economic development efforts.

"It's our biggest economic development tool," he said. "We take [potential business owners] to the park and say 'look what we built by putting this tax on ourselves.' It has landed us industry and jobs."