In a recent poll on East Ridge News Online, readers were asked if they preferred spending taxpayer money on a ladder truck for the fire department or improvements to Camp Jordan Park.
When the poll was first posted, about 90 percent of respondents preferred the city to spend money on a fire truck.
East Ridge Mayor Brian Williams took to social media, and on his mayor’s Facebook page gave residents a primmer on government financing.
Mayor Williams said the poll question was “misleading” and that money to run the city doesn’t come out of one pot.
Williams explained that the improvements to Camp Jordan Park – the city intends to borrow $1.8 million to build four more soccer fields and a 200-spot paved parking lot – will be paid for out of hotel/motel tax revenues, not from taxpayer money.
He went on to say that the purchase of a ladder truck for the fire department could require a property tax increase, as there was no revenue stream he could identify to pay for a $1 million truck.
Turns out there is a revenue stream that could pay for a new ladder truck, or for that matter any other obligations the city might take on. That revenue stream is the hotel/motel tax, the same revenue stream that has been earmarked for improvements to Camp Jordan.
For more than a decade city officials told the public that the hotel/motel tax – a four percent levy on travelers renting rooms at city hotels – could only be used for park/recreation and tourism. The first ordinance (No. 779) establishing the tax was approved in January 2005, then repealed a month later by Ordinance 781. Ordinance No. 782, passed in March of 2005, established the hotel/motel tax at two percent. The current ordinance (No. 911) was amended in 2012, raising the rate to four percent.
There is no mention in any of these ordinances that the revenues – according to the latest audit about $1 million in surplus – must be spent on parks/recreation or tourism.
Mayor Williams said he was only recently made aware that there were no restrictions on spending hotel/motel tax revenues when a citizen made inquiries.
On Wednesday Mayor Williams was asked if the city could use revenues from the hotel/motel tax to buy a ladder truck? His answer was “yes.”
Mayor Williams said he reached out to Fire Chief Mike Williams to ask him if his department needed a new ladder truck immediately. The mayor said that Chief Williams said the department did not. Chief Williams said the department could rely upon its mutual aid agreement with area fire departments in the event of a fire in which a 100-foot ladder truck was needed.
“I want to do what’s right,” Mayor Williams said. “I’m 100 percent behind our fire and police departments.”
City Manager Chris Dorsey said Wednesday that there are no restrictions on the spending of hotel/motel tax revenue in “home rule” municipalities like East Ridge. However, cities that do not have home rule are required by the state legislature to spend the revenues on recreation and tourism.
He said that the hotel/motel tax revenues in East Ridge are “earmarked” for Camp Jordan Park to service the debt on money borrowed to make improvements to the park.
Dorsey referred to a February 2005 City Council Workshop in which Mike Steele, President of the Regional Youth Soccer Association (RYSA) addressed the council. Steele, who would go on to become Mayor of East Ridge, said RYSA was charged with building a “world-class soccer complex for the purpose of economic impact for the community.” A hotel/motel tax would be one way of financing $1.7 million to complete 14 soccer fields and maintain them.
During this workshop, Steele said that “if the City borrowed the money, it would be paid back out of the hotel/motel tax funds.” He said it would not affect the general fund and would not require a property tax increase.
Dorsey concluded that the workshop meeting of February 2005 was the foundation for the “intent” of the city to earmark hotel/motel taxes for improvements to Camp Jordan.
