Harrodsburg to debate restaurant tax

HARRODSBURG — For the past four years, folks eating out in Harrodsburg have paid an extra 3 cents for every dollar they dropped in local restaurants, with that additional money going to help fund tourism activities in Mercer County.

On Tuesday evening, the Harrodsburg City Commission is hosting a forum to let residents and restaurant owners air out their feelings about the 3 percent restaurant tax created by the commission in 2007. The discussion begins at 7 p.m. at Lion’s Park Community Center

“I don’t understand why they’re bringing this up now,” said Lora Hill, owner of The Olde Bus Station restaurant on Greenville Street who initially voiced concern about the tax after it was adopted four years ago.

Mayor Eddie Long explained that the restaurant tax has emerged as an issue during the two election cycles that have occurred since it was passed and some current commissioners promised to look at the tax during their campaigns. Tuesday’s forum lets them fulfill that promise while giving the community the chance to speak up for or against the tax, Long said.

The commission is not predisposed in favor of the tax or against it, the mayor said, and will take no action Tuesday. Depending on sentiments expressed at the forum and related feedback, the commission could decide to repeal the tax, reduce it or leave it as is at some future date, Long said.

Karen Hackett, executive director of the Harrodsburg-Mercer County Tourist Commission, is prepared to defend the tax. She’s armed with handouts that extol the virtues that tourism — and tourism dollars — bring to the county.

“I’m optimistic the majority will see the positive impact of how the restaurant tax benefits the entire community,” Hackett said.

The restaurant tax creates roughly $600,000 in revenue a year, which is split 50/50 between the city and the tourism commission.

The city uses its portion of the tax to fund grants that are provided to local entities and events related to tourism or quality of life. Anderson-Dean Park, Ragged Edge Theatre, Mercer County Fairgrounds, the Fort Harrod Beef Festival, the Harrodsburg Historical Society and other groups are regular recipients of funding created by the restaurant tax.

Long said without restaurant tax money, contributions from the city to those endeavors would be greatly reduced or dry up completely because there is little money left over in the city’s general fund after other government services are paid for.

While the city’s use of the tax money is fairly well understood, some question how the tourism commission spends its part.

“We’re all aware of what the city does with its half; we’re not as informed about what tourism does with its half,” Hill said.

According to Hackett, the tourism commission’s operating budget for 2011-12 is $784,000, with about $300,000 coming from the restaurant tax. The commission also receives $95,000 from a local hotel room tax, $20,000 from state tourism resources and $86,000 carried over from last year’s budget, she said.

The commission spends 84 percent of its budget promoting the county through regional, state and national marketing campaigns, and sponsoring events that attract people to the county such as basketball tournaments and festivals. Fourteen percent is spent on personnel and 4 percent on operating expenses, Hackett said.

Hackett declined to reveal how much she is paid, but said the $109,760 in personnel expenditures covers her annual salary and that of a full-time assistant, plus three part-time seasonal workers.

Hackett said that, according to the state Department of Travel and Tourism, Mercer County added $39 million to its economy because of tourism-related spending. Each overnight visitor spends $125 per day, while day visitors spend $72, and that money is turned over in the economy seven times, she said.

In contrast, local residents, on average, each pay about $25 a year in restaurant taxes, Hackett said, and much of that money is spent on entities and activities that enhance the quality of life for everyone in the county.

“That’s a small contribution for residents to give back to the community,” she said.

Hill said she is looking forward to hearing a full explanation for how the tax money is spent. Customers at her restaurant still occasionally complain about the extra pennies tacked on to their bills.

“I”ve got a cheeseburger basket for $4.95. When I ring them up, it’s $5.40, and they’re like, ‘Where did you get that 45 cents on there?’ and I have to remind them about our tax,” she said. “If that tax is going to get more people to Harrodsburg to spend money, I’m all for it. I just would like some more information.”

Pedro Gomez, manager of La Fonda restaurant on Main Street, said his business relies heavily on local, regular customers — not tourists — to survive, and many of them are unhappy about the tax.

“It’s ridiculous. I don’t see where the money is going,” Gomez said. “It’s only in this town. They don’t have it in Danville or Lawrenceburg. Customers are all the time asking about it.

“It doesn’t hurt the restaurant, but the customers, it hurts them,” he said, tapping at his wallet in his back pocket. “It’s hard to explain to them.”