Restaurant tax: Legislators fail to reach tax agreement for CVB

March 28, 2018 10:53:22 AM

Slim Smith - [email protected]


The bill to extend Lowndes County's 2-percent restaurant sales tax is all but dead, as local business, government, economic development and tourism officials begin to absorb the bleak consequences.


Barring a last-minute compromise and a suspension of the rules that would allow the bill to move forward even as legislators rush to complete their work and leave for home, the bill is practically done for.


At 8 a.m. today, Manly Barton (R, Moss Point), the chair of the House Local and Private Committee, said there had been no change of position on either the House or Senate side in conference committee discussions.



"There hasn't been any progress," Barton said. "I had a discussion with Gary Jackson (R-French Camp), the committee chair on the Senate side late (Tuesday) afternoon and he said he did not see a situation where the Senate conferees were going to change their position. Then I talked to our representatives (Jeff Smith and Gary Chism, both of Columbus) to make sure they weren't going to change their mind. Both told me they weren't."


The dispute that will likely mean the end of the county's 2-percent restaurant sales tax came over whether the tax should be collected at all restaurants and businesses that sell prepared food and beverages. Under the current tax, it is collected from patrons only at businesses where those sales exceed $325,000 annually.


When the city and county agreed to a joint resolution needed for a bill to extend the tax for four more years (the current tax expires June 30), both governments removed the $325,000 threshold.


However, the House amended that bill to reinstate the $325,000. A standoff ensued involving local Reps. Smith and Chism, who advocated the threshold, and Sen. Chuck Younger, who said he would not approve adding the threshold.


Barton said that even if there had been some compromise Tuesday, it would have been unlikely the bill would have been passed today.


"Since the deadline has already passed, we would have to ask for the rules to be suspended to move it forward," Barton said. "And with everybody wanting to get finished and go home today, I doubt we would have been able to get much support for suspending the rules."


Smith and Chism both argued removing the floor would be a new tax on restaurants -- even though the sales tax is assessed on restaurant patrons, not the restaurants themselves.


Chism previously told The Dispatch he would support removing the floor, especially since the Lowndes County restaurant sales tax was the only one of its kind left in Mississippi that included one.



Life after the tax


Local officials now must consider what life will be like after the demise of the tax.


Under the agreement that failed today, the tax, which generated roughly $2 million in Fiscal Year 2017, would have provided the primary source of funding for the Columbus-Lowndes Convention and Visitors Bureau's tourism promotion efforts; $250,000 annually for the Golden Triangle LINK for economic development; and $400,000 each year to the city of Columbus for improvements to the ball fields at Propst Park, ($300,000), completion of the Terry Brown Amphitheater ($50,000) and four festivals held in the city ($50,000).


"The loss of funding through the 2-percent restaurant tax is going to be devastating and far reaching," said Nancy Carpenter, the CVB's executive director. "It is not just the loss of approximately $2 million. According to Mississippi Development Authority, visitors to Columbus/Lowndes County spent approximately $116 million in 2016. This $2 million has provided jobs: part-time, full-time and seasonal. The money has allowed Visit Columbus (CVB) to partner with many organizations to apply for grants and provide match money for those grants. We have received approximately $150,000 in the grants the last few years. New businesses have opened because of the activity and marketing climate created by Visit Columbus."


Golden Triangle Development LINK CEO Joe Max Higgins said his organization will feel the impact of the loss as well.


"The $250,000 is a major loss of income," Higgins said. "In the economic development business, there is a correlation between resources and success. We will do the best we can and continue to pursue the ever-increasing percentage of funding that comes from the private sector."


Columbus Mayor Robert Smith said the loss of the tax, and an inter-local agreement reached with the CVB to provide the city with the parks and festival funding, is a stinging blow.


"It's a major disappointment because we had successfully negotiated with the CVB to work hand-in-hand for the benefit of both the city and the CVB," Smith said. "We lose. The CVB loses. The county loses. Some things are win-win situations. In my mind, this is a lose-lose situation. I'm just disappointed."


Mark Castleberry, a member of the CVB board, operates three hotels in Columbus said the impact will damage the hotel industry as well.


"The elimination of funding to the CVB will have a significant negative impact on hotels in Columbus," Castleberry said. "While industry and the business traveler uses hotels Monday through Thursday, the three weekend nights are reliant on events such as sporting events, fishing tournaments and other multi-day special events.


"Most of those events came to Columbus as a result of the work and incentives supplied through the CVB," he added. "The advertising the CVB has done to entice spectators attending MSU or Alabama games to stay and eat in Columbus has had significant positive impact. These are dollars coming into Columbus/Lowndes County from out of county/State that will be lost. In the hotel industry we refer to having a 'perishable product.' Once a room night has passed with an unsold room you can't make it up again."


Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected]