Proposed use of restaurant tax funds called 'improper'

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By Ben Carlson

Stated plans from local officials on how they would use a proposed 3 percent restaurant tax were called improper Monday by two people who work closely with the tax in other cities.

The Lawrenceburg City Council is expected to consider the tax - proposed by the Anderson County Tourism Commission - next month. If approved, city and tourism officials say they plan to divide the estimated $320,000 the tax would generate.

With its share, the tourism commission would hire a director who would double as director of the county's Economic Development Authority.

Mayor Edwinna Baker said a week ago the city would use its share to maintain and enhance the city's parks system in hopes of bringing in visitors from other areas.

Although they are generally on opposite sides of the restaurant tax issue, Karen Hackett, executive director of the Harrodsburg-Mercer County Tourist Commission, and Stacy Roof, president and CEO of the Kentucky Restaurant Association, said neither side's intended use is allowed under state law.

"That money is supposed to be used for tourism, not other things," said Roof, commenting on the idea of having a joint director of tourism and economic development.

"If they're splitting those duties, it certainly calls into question how the money is being used. Using money that way is not going to promote tourism and is not at all in line with the way that law is written."

Hackett agreed.

"According to the way the statute which defines how that revenue can be collected and spent, it would not be in accordance to combine those two," she said, even if the county used economic development money fund a portion of that person's salary.

Nor would it be proper for the city to use its share of the revenue to maintain and enhance its parks, Hackett said.

"That is questionable because the word 'recreation' was taken out of that statute in 1992 to prevent cities from using that money to fund city parks," Hackett said.

"The revenue can only be used for tourism marketing and promotion. That's why the statute was drafted in the first place."

Hackett said her agency has collected the restaurant tax in Harrodsburg since it was implemented last July. She said strict guidelines are in place to ensure the city's portion is spent on tourism.

She said city and tourism officials created a grant program to distribute the city's portion of the tax. It includes city commissioners and tourism officials who review grant requests and determine if they are eligible.

"They will deem those projects eligible only if they are directly related to tourism," Hackett said. "It has to directly impact the tourism industry."

For instance, if Anderson-Dean Park wants to host a softball or soccer tournament, it can request grant funds to help promote the event, Hackett said.

"Those teams would come in from other areas, spend the night, eat here and shop in stores," Hackett said. "Those activities have a direct impact on tourism, so the city could fund a portion of the cost to help promote the tournament and recruit those teams.

"[The city] cannot use that money to fund city parks."

Roof, who said she has worked for the restaurant association in opposition to the restaurant tax since 1995, said cities and tourism commissions often misuse receipts.

"This happens all over the place. The money has been misused and there's no entity in place to question it. Someone would have to file a lawsuit or bring in the attorney general's office, but seldom will anyone do that."

Hackett said in Mercer County, her tourism department is separate from economic development. She said she agrees that tourism and economic development are closely related, but each has a different role in a community.

"Our economic development office focuses on retention and recruitment of industry," she said. "My office focuses on tourism. But we do partner if something related to tourism comes up."

Hackett said her office is in charge of collecting and enforcing the restaurant tax in Harrodsburg, which requires a second full-time staff member to maintain accounting records.

"In addition to myself I have an executive assistant," she said. "We also have seasonal employees from May to October to staff our visitor center."