Tuesday, June 18, 2024

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County’s legislators defend new hotel tax for municipalities

Alamance County’s legislators have rallied behind a new state-level measure that permits some local municipalities to impose their own tax on hotels and motels – despite the criticism that this move has recently drawn from a somewhat unexpected quarter.

Earlier this week, state senator Amy Scott Galey joined state representatives Steve Ross and Dennis Riddell in defending the General Assembly’s decision to give Burlington, Elon, Mebane, and Graham the power to collect this so-called room occupancy tax in order to fund tourism-related activities within their own borders.

These four communities were among the dozens of localities across North Carolina that were empowered to implement this sort levy under an “omnibus” bill that the N.C. General Assembly approved at the end of October.

In the case of Burlington and its three municipal peers, this newly-ratified state legislation authorizes a 3-percent levy comparable to a long-standing 3-percent impost that’s already assessed on visitor accommodations throughout Alamance County.

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Much like the existing, countywide tax, the proposed tariff would be collected by a semi-independent tourism development authority in order to subsidize programs and organizations that lure visitors into the area. But while the proceeds from the existing tax are split between the county and a local visitors and convention bureau, the haul from the new levy would go straight into the coffers for the four municipalities that are home to the county’s hotels and motels.

In a formal statement on Wednesday, Galey, Riddell, and Ross emphasized that this municipal taxing authority has long been on the wish lists of the cities and towns that they represent in the General Assembly.

“For many years, local governments in Alamance County have informally discussed a potential increase and redistribution of the [county’s] 3% occupancy tax,” the three legislators recalled in this statement, which they subsequently shared with The Alamance News. “This summer, the house and senate leadership finally agreed to consider new occupancy taxes…But our proposed model differed in two ways from the typical statewide approach preferred by [the hospitality] industry and [the] house leadership.”

The county’s legislative delegation goes on to explain that the state’s prototypical municipal occupancy tax relies on a separate tourism authority for each city or town – as well as a revenue distribution model that ensures revenue remains within the communities where it’s collected. The three legislators add that the creation of separate authorities seemed “silly and wasteful” within the context of Alamance County, while a geographic distribution model had traditionally been an utter nonstarter for officials in Elon and Graham, which are home to far fewer hotels and motels than Mebane and Burlington.

According to the joint statement, Alamance County’s government initially offered to serve as a clearinghouse for this municipal occupancy tax and even proposed tacking it onto its own, extant 3-percent levy. This plan nevertheless ran up against stiff resistance in the state house.

“Therefore, county government left the discussion,” the joint statement recounts, “which continued among the city managers from Elon, Burlington, Mebane, and Graham.”

According to the joint statement, Galey received a more viable proposal from the legislature’s bill drafting unit on October 9. Under this alternative vision, a single tourism development authority would be established, although the revenue it accumulates would be divvied up based on a hotel’s location rather than the population-based system that Elon and Graham had preferred.

“Senator Galey forwarded the draft language at 4:08 [p.m.] on October 9, asking that city managers be sure that city attorneys review it,” the joint statement asserts. “Emails show that the draft was circulated to all city managers by 5:54 the same day. Between receipt of the draft and October 25, when the house and senate voted on the bill, neither Senator Galey, Rep. Ross, nor Rep. Riddell received any negative feedback from a city manager or council member.

“Once the bill became law on October 25,” the statement adds, “the city manager or a designee from Graham, Elon, Mebane, and Burlington participated in at least two meetings to discuss implementation of the bill [and] it was widely known that the new occupancy tax would be distributed based on hotel location, not town population.”

Despite this apparently “widespread” understanding, the terms of the newly-authorized levy seemed to come as a bit of a shock to Graham’s mayor Jennifer Talley. Last week, Talley told The Alamance News that the whole process which led to the levy’s authorization had smacked to her of the ol’ bait and switch.

“Before the legislation was pseudo-agreed to,” she went on to recall in an interview, “we said this is what we wanted, and I understood that the occupancy tax would be distributed based on population.”

Talley’s version of events doesn’t exactly track with the account presented by the county’s legislative delegation. Even so, Galey and her counterparts in the state house have held out the hope of potential revisions to placate Graham’s mayor and anyone else who may’ve felt slighted by the bill’s ratification.

“It has become apparent that at least one manager did not inform local elected officials about the draft bill before it passed,” the joint statement goes on to concede. “Therefore, the legislative delegation will continue to work with local governments, General Assembly leadership, bill drafting, and the tourism industry for any possible ‘fix’ in this summer’s short session [of 2024].”

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