Sunday, July 14, 2024

114 West Elm Street
Graham, NC 27253
Ph: 336.228.7851

First a new tax, then a justification for it

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If there’s every been a case of getting the cart before the horse in public policy, it’s surely the recent effort to double the local hotel occupancy tax and allow the county’s four largest municipalities – Burlington, Graham, Mebane, and Elon – to divvy up the new proceeds.

The county already has a 3 percent occupancy tax, which it shares among county government and a local visitor’s and convention bureau. Now another 3 percent occupancy tax will be layered on top of that which would be reserved just for the four municipalities where the hotels and motels are located.

In essence, these four municipal governments apparently lobbied the county’s legislative delegation – largely behind the scenes – to grant new taxing authority, which the legislators dutifully slipped into an omnibus bill that passed the General Assembly at the end of the legislative session in October.

Only Burlington’s city council – primarily its mayor, Jim Butler – to the best of our observation, ever uttered one word in public about wanting such authority.  In a meeting with state legislators earlier this year, Butler listed the item among the city’s desired special legislative provisions.

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Burlington has always felt it was getting short shrift by virtue of the fact that it has the most hotels, but it has had to  share the proceeds from the current occupancy tax with other municipalities and the county itself.

The other three municipalities just quietly lobbied for doubling the tax on hotel guests, but never revealed their intentions to their residents – neither individual citizens nor business entities that might be affected.

Graham’s mayor, Jennifer Talley, apparently thought the new money was going to be divided proportionately, by population, rather than by the location of where the revenue is generated. But the legislators say the new tax will go to the cities based on taxes generated from hotels and motels.

We don’t have a particular view on the formula used.  We question the fundamental premise in secretly getting authority for a new tax.

Now we suppose to some extent the municipalities figured, correctly, that they can slip such a tax hike under the public’s collective nose since their constituents have already yawned at the large property tax increases that their councils adopted earlier this year.

If residents of Burlington don’t apparently care that they got hit with whopping 18 percent property tax increase about what should have been the “revenue neutral” level suggested by the county’s recent revaluation, we guess we shouldn’t be surprised that hoteliers there won’t care that much about an extra 3 percent hotel occupancy tax – on top of the existing 3 percent county hotel occupancy tax.

Similarly, if residents of Elon didn’t raise objections to  getting hit with a 14 percent property tax rate increase above “revenue neutral,” and residents in Mebane didn’t seem to mind an 8 percent tax hike above that same standard, we guess the councils there can justify in their own minds to keep on taxing as though no one cares – because apparently few residents actually do care about being overtaxed.

Only Graham adopted a revenue neutral tax rate this year.

We see several problems with the proposed new tax on hotel guests.

For starters, it’s just one more – only slightly more creative – way for local governments to dip ever deeper into taxpayers’ pockets, although these pockets are those “out-of-towners,” who aren’t otherwise paying much to the county’s coffers. So who cares if their hotel tax rate is doubled on them during their stays in local hotels?

We don’t have any particular brief to offer for the hospitality industry; they’re just the latest to feel the brunt of local municipality tax-and-spend greed and avarice.

We continue to express concern with the backroom manner in which this whole episode was handled.

Local councilmen (and their municipal managers) got the local legislative delegation to do their bidding – without any proper public notice or public scrutiny before their backroom requests went to the General Assembly.

We’ve previously urged, and we do so again, that Raleigh legislators should insist that local governments hold a public hearing on proposed increases in taxes – and significant changes in local municipal ordinances or authority – before  they’re allowed to trundle off to ask Raleigh to do their dirty work in raising taxes, or at least establishing the authority for new taxes.

Yet not a one had done so.

And, as noted above, only Burlington has even publicly discussed the matter beforehand at all – albeit only once, and ever so briefly.

And why, one might reasonably ask, do any of the four cities actually need to receive more money from hotels?

That’s an interesting question, as well.  And one which none of the four cities has adequately answered.

Their collective idea seems to be along the lines of, “let’s get some more money in our pockets, then we’ll decide how to spend it.”

No, it’s not as though the towns and cities have come up with some agenda of what more they need to be doing to promote tourism for their respective borders.

On the contrary, as best we can tell, none of the cities has done that.

None has an actual plan. Burlington has some ideas, but no actual budget or specifics for how they’ll spend the extra money.

Burlington and Elon, respectively, are at least getting ready to hold a public hearing on the idea of establishing the new, higher occupancy tax rate.  Maybe then they’ll unveil some of the ideas of what they may do with the extra money they so desperately want.

All in all, this has not been a good example of how government should work.

But, unfortunately, it’s become all too indicative of how it actually does work: raise taxes first, then figure out what to do with all the extra money.

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