City officials are reconsidering a proposed 2 percent gross sales tax for hotels, motels and restaurants to fund infrastructure repairs.
The decision came at Tuesday’s City Council meeting after Councilman Al Brock raised his concerns about the tax targeting specific industries like the hotel and restaurant industries who are already being additionally taxed.
“I’m not going to support burdening the tourism industry — the restaurants and hotels,” Brock said. “They’ve got businesses and they are trying to survive. You’re basically increasing the costs of you going out or people coming into the community.”
Brock then proposed an alternative motion for a 1 percent across the board sales tax with the exception of groceries and medications with all council members approved. A 1 percent tax increase applied to hotels, motels, restaurants and retailers would generate about $1.4 million annually for the city.
Proceeds from the sales tax would help pay for the payment of the principal and interest on bonds issued by the city to make capital improvements.
Although the city will soon receive $901,000 from the state Legislature as part of an infrastructure package, the amount is not enough to cover needs in the city.
“What we are looking at over the next many years is going to be difficult and we need some source of revenue,” Brock said.
The last four years city officials have increased water and sewer rates for residents in order to fund State Revolving Fund loans for the sewer system.
When the city increases water and sewer rates, residents have a tendency to get upset, said Councilman James Wilson.
“When we make these revolving loans from the state, the state wants their money back so that means we got to go in and raise the sewer and water bills and we’re going to make everybody mad, so we all going to get mad at one time,” he said.
Funds generated from the tax would help pay for capital improvements and costs of constructing, improving and paving streets, sidewalks, driveways, parkways, walkways and public parking facilities.
It would also allow the city to purchase land repairing, improving and extending waterworks, gas, electric and other public utility plants or distribution systems.
Constructing bridges and culverts as well as repairing and extending sanitary storm drainage and sewerage systems for related purposes are included too.
If the state Legislature approves the city’s request for the local and private bill regarding a sales tax increase, it would still need to hold a referendum for voters to approve or disapprove it sometime in June or July.
Greenville’s current sales tax is 7 percent. Adding the proposed 1 percent sales tax to the city’s current 7 percent sales tax, 2 percent sales tax on hotels and motels and 1 percent sales tax that funds the Greenville and Washington County Convention and Visitors Bureau would exceed the 10 percent maximum for sales tax allowed by state statute.
In 2011, House Bill 1453 passed allowing for a 2 percent lodging tax on hotel stays. It was extended under Senate Bill 2923 in 2015 and SB 3018 in 2017.
Washington County voters approved a referendum for the sales tax by a 70.8 percent vote in the Nov. 8, 2011, election. The tax went into effect March 1, 2012, and has been helping fund the Delta Sportsplex Foundation.
An additional 1 percent tax since 1991 also funds the Greenville and Washington County CVB for hotels, motels, restaurants and premises that sell alcohol.