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To tax, or not to tax?

That is the question the McCreary County Fiscal Court is expected to vote on during a second reading of a proposed restaurant tax tonight.

If passed, the tax would levy an additional 3 percent surcharge on each purchase at local restaurants, and at establishments that serve pre-prepared, ready-to-eat food.

The Voice spoke to some local business owners, as well as magistrates from both sides of the issue to get their thoughts on the tax going in to the meeting.

Todd Jones, owner-operator of two convenience stores in McCreary County said his main concern with the proposed ordinance is on the administrative end, both his and the County’s.

Jones said one issue his businesses would face is tracking daily sales, and separating what items qualify for the tax and what doesn’t. For many smaller businesses like his, the added accounting may end up costing the business owner more.

Jones also expressed his concerns with how the tax would be administrated.

“There are a lot of questions,” he said. “Who is going to regulate this? How are they going to make sure everybody is paying their fair share and it is equitable?”

He stated his customers have shared their concerns with him over the tax as well.

“Most of my customers say they don’t mind paying taxes – if they are being spent wisely,” he added. “To them, their real problem is using that money to address an issue further on down the line then what should be getting done here.”

Nina Bradley, owner of Bradley’s Gourmet Coffey & More, has a unique perspective on the tax. Not only is she a small business owner, she also serves on the McCreary County Tourism Commission, which presumably would benefit from the revenue generated by the levy.

“I know the County is struggling financially, and I am all about supporting our County government,” Bradley said. “My customers may not enjoy paying that extra three-percent, and I don’t really want to have to do it, but if it passes I will.”

But Bradley admits she wonders if Tourism would get the revenue as it has been stated Tourism and Economic Development would be combined into one entity, thus – possibly – allowing the Fiscal Court to spend some of the funding on what it deems as “economic development.”

“I’m for it, if it helps, I just want to see the money go where it is supposed to go,” she said. “If they give us enough money to employ a qualified full time person to promote tourism, which is what we need.”

There are questions about the Judge Executive’s possible plan to combine the departments, presumably giving the court the authority to spend the money.

Kentucky Revised Statute 91A.400, which allows the establishment of the tax, implicitly states: “all money shall be turned over to the Tourist and Convention Commission.”

Judge Stephens stated that the Fiscal Court would ultimately decide how the money would be spent, but the tourism board, which is structured as an advisory board, would be able to make recommendations to the Court on how they thought the money should be spent.

Kathy Ross, operator of KFC and Arby’s, said she “definitely opposes the tax.”

“It’s going to hurt the businesses,” she said. “Restaurants are probably some of the most successful businesses in this county. Why would they want to hurt the ones that are doing the most to help?”

Ross believes the tax would have a “trickle down” effect that would ultimately lead to lower revenues and higher unemployment in the county.

“People aren’t going to go out and eat as much, which will hurt the businesses. If we are not as busy, we won’t need as many employees. That means less Occupational Tax for the County.”

Ross also questions the need for spending more money on tourism now, when there are pressing issues facing the county.

“It seems like they are stuck on tourism,” she said. “It seems to me they could find other ways to help the county.”

Magistrate Roger Phillips, who has opposed the tax since the beginning, states he has questions both legally and ethically if the ordinance were to pass.

“Honestly, I don’t trust the administration to spend the money the way they are supposed to,” Phillips said. “And, I don’t think, legally, it can pass.”

He noted he spoke to an attorney with the Kentucky Association of Counties, who advised him that he didn’t think it was a legal tax for McCreary County.

The statute authorizes only fourth or fifth class cities to enact such a tax. There is a question as to whether or not McCreary County, which does not have an incorporated city within the borders, would be able to levy one. Judge Executive Doug Stephens has stated he believed it would be possible, since the state government has treated the County as a fifth class city in other circumstances, and cites the allowing of establishing a transient tax on hotel beds as precedent.

Phillips says imposing the tax, only to find out later that it was illegal, could break the County.

“I’m afraid, if it does pass, someone will come along and challenge it,” he said. “If, say after a couple years, it gets overturned, we would have to pay that back.”

“And I’ve got other worries,” he added. “I think it will hurt businesses. If the customers protest the tax, and not eat out, it could really hurt the restaurants here.”

Duston Baird, who along with Jason Mann and Judge Stephens, voted “yea” on the first reading of the ordinance, says he has yet to make a final decision on his vote tonight.

“I still have some questions and am doing my research on the issue to make sure I make the best-informed decision I can,” he said.

Baird stated he is seeking advice from the Department of Local Government on legal concerns over the tax, and will have answers before the vote is called.

“In my opinion the tax was the best option we had at the time if we wanted to keep any momentum from what tourism has accomplished in the past couple years.”

“My main concern is, if we do pass the tax, would be that the money is spent the way it is supposed to be.”

Baird said he is aware of the possibility of using some money on projects only tenuously related to tourism, such as park development, but would want to make sure that spending is legal before any approval.

The Fiscal Court is scheduled to meet at 6:00 p.m. tonight in the Courthouse.

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