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SIMPSONVILLE – A spirited crowd that packed Simpsonville City Hall on Thursday night to plead with city commissioners not to approve a 3 percent restaurant tax were heard but not heeded.
Commissioners listened patiently for more than an hour, then voted, 4-1 – with Sharon Cummins casting the only opposing vote – to adopt the second reading of an ordinance to create the tax on food and beverages at the city’s expanding number of eating establishments, a move that could provide a windfall for public projects in the city.
The collection will begin in April and will be handled by the Shelby County Tourism Commission, with 50 percent of the revenue going to Simpsonville, which must use those funds for city improvements and tourism-enhancing activities. The tourism commission would use the rest to promote the county, with its promotions including and directed at Simpsonville.
“We are required to hold that money in a separate account and submit our plans for approval,” Mayor Steve Eden said. “We will have a public hearing once a year and ask people how they want to spend it. We can do the sidewalks or have a festival or buy land for a city park. We can let the people decide.”
How much money would they divvy? ShelbyKY Tourism and Visitors Bureau Executive Director Katie Fussenegger had predicted the tax could generate about $50,000 in revenue form the existing restaurants, but analysis presented at the meeting indicated that the Pilot/Wendy’s alone would surpass that amount, based on its current sales.
But many who attended – property owners, restaurant employees and simply longtime residents – expressed their displeasure at this concept, complaining that the measure would put undue hardship on restaurateurs and questioning if Shelby County even could afford to have a tourism commission.
This tax, long authorized by state statute, has emerged in the aftermath of the planned opening this summer of the Outlet Shoppes of Louisville, which is expected to bring hundreds of thousands of visitors to the county and expand the city’s coffers with occupational and property taxes.
The city has approximately seven eating establishments that would collect this tax – anything that is more than a booth at a festival, basically – and two more restaurants have filed plans for out lots around the mall, which also will have a food court.
“I’ve enjoyed watching the growth here,” said Angela French who lives in Cardinal Club. “I support the outlet mall. I’ve promoted all the growth. But I feel like this is a punishment and could deter future development. Why not exempt locals [residents]?”
School Board Chair Doug Butler, Library Board Chair Kenneth Hudson, resident Paul Smith and others all said they thought the city was going too far, that taxes hurt business, that restaurants would be hurt, that customers would choose to go elsewhere and that ultimately the city would lose in this step. They questioned why the city of Shelbyville had not taken similar action.
Erica Green, a manager at J.T.’s Pizza and Subs on Buck Creek Road, who has been the vocal leader of the critics of this tax – speaking passionately at both public hearings – held up a petition that she had created at her restaurant that showed only two signatures – she said they were forged – in support of the tax and almost all opposed.
Dan Ison, who owns property that includes J.T.’s and chairs the city’s fire district, also for the second meeting spoke aggressively against the tax and encouraged commissioners to vote it down or delay or reduce it.
“You can do one percent. You can vote to table this,” he said.
Many of their complaints were based on the added cost to consumers and how that could push potential customers away from local restaurants to Shelbyville and Middletown. For a $10 tab, the additional cost would be 30 cents. For a $1,000 spent, the extra cost would be $30.
Several who spoke decried the existence of the Shelby County Tourism Commission and questioned the civic projects the city might derive from the revenue. They spoke in some cases derisively about the city’s “sidewalk to nowhere,” referencing the new sidewalks that were built along the south side of U.S. 60 between Fairview Drive and Old Veechdale Road, the first phase in the city’s long-range downtown plan.
Charlie Kramer, tour director for ShelbyKY Tourism and Visitors Bureau, also a resident of Simpsonville, provided some history of the tourism commission and addressed concerns from the speakers that the money would only go to support the Saddlebred industry in the county.
At the original hearing on Jan. 15, resident Janet Cuthrell introduced a report from the University of Kentucky that she described as being anti-restaurant tax and recommending that officials study it.
So they did. City Administrator David Eaton and City Commissioner Cary Vowels extensively reported on the contents of that report, which was a dissertation by a foreign exchange graduate student and was not official university research. Vowels traveled to Lexington to discuss its findings with the professor who had overseen the student’s work.
The bottom line is, Eaton said, that the report showed that a restaurant tax would have very little affect on the choices and spending habits of those who were likely to eat out.
Smith said he had read the report and pointed out that the research was among households that largely had an income of $100,000 and above, which would make it among a group less affected by additional charges.
Another resident, Rick Mansfield, said that his family uses the Dave Ramsey approach to setting aside money for eating out. “This wouldn’t be a factor at all,” he said.
Cummins said she voted against the ordinance “for the people. I heard from a lot of people who thought I had voted it in already because I passed it along on first reading,” she said.
Vowels, who also studied ordinances provided by 27 of the 41 cities in Kentucky that have a tourism tax and also visited four cities to see how they work – “Mount Sterling takes in thirty-two million dollars; the city gets none of the money,” he said – after the meeting said he had not decided how to vote for the ordinance until Monday, when he visited UK.
“Going over that is what made up my mind,” he said.
But in the end, with the ordinance’s passage, commissioners said they were keeping their focus on how the revenue might help develop the downtown plan and enhance the city’s role of the future. Eden, Vowels and Commissioner Michael Hesse all spoke about their fervent commitment to developing the core of the city.
Eden and Vowels discussed the coming changes to Buck Creek Road, which beginning next spring will be widened and will include sidewalks and bicycle trails down both sides and how that could draw away traffic from the oldest part of the old city and its main drag, U.S. 60.
“I care about what happens on U.S. 60,” Vowels said. “The state isn’t going to pay for that. That’s the core of our community.”