Tax an issue for Fayette election
Despite the ability to impose a hotel room tax that could generate more than a half-million dollars annually and save the general fund a payment of $20,000 a year to a tourism agency, Fayette County is one of only three counties across the state that has not levied the tariff. Muriel Nuttall, executive director of the Fayette Chamber of Commerce, said the Fayette County Tourism Alliance is advocating implementation of the tax.
On the verge of the May 15 municipal primary that features all three Fayette County commissioners seeking re-election, the Fayette County Tourism Alliance, composed of members from the Fayette Chamber of Commerce, the National Road Heritage Corridor and the Laurel Highlands Visitors Bureau, has decided to bring the issue to the forefront.
Questions about the hotel tax will be among those asked of the five Democrats and two Republicans seeking party nominations at a candidate forum slated for 7 p.m. Monday at the State Theatre Center for the Arts. The Fayette Chamber of Commerce will sponsor the forum.
Nuttall said the topic has been “approached” by the county commissioners but never came back to their floor for a vote. “It’s kind of a necessity. We have to get things going,” Nuttall said. “We have amazing tourism destinations. This is a huge piece of that.”
Legislation in late 2000 authorized the 45 Pennsylvania counties that did not levy a tax on hotel rooms to do so up to 3 percent of the room rate, and since that time the only counties that do not have the tax are Fayette, Fulton and Perry. Nuttall said Fulton and Perry are not tourist destination counties, while Fayette County clearly is because tourism is either the number one or number two industry in the county.
Nuttall said neighboring counties served by the LHVB have implemented the tax and have been able to not only stop paying an annual contribution to the tourism bureau, but have been able to distribute hundreds of thousands of dollars generated by the tax for tourism-related purposes within the counties.
“It’s a win-win,” Nuttall said. “The county gets the $20,000 back because the money isn’t taken out of the general fund, and it is not a tax that is levied on the residents of Fayette County. Anywhere you travel, you pay it,” she said. Nuttall added that as an example, in New York state the tax is about 12 percent.
“Anyone that travels anywhere, you pay it. If people stop and look at a hotel receipt, it’s on there and many places it is much higher,” Nuttall said.
Nuttall said because tourism is either the number one or number two industry in the county, it seems “very strange” that the county isn’t imposing the tax. “It’s a pass-through tax that is only paid by someone staying in a hotel or bed and breakfast,” Nuttall said.
Nuttall said although the general consensus in Fayette County seems to be that fewer people will stay here if the tax is implemented, that has not been the case in Somerset and Westmoreland counties. “In Somerset and Westmoreland counties, overnight stays have increased every year since they implemented the tax,” Nuttall said.
Nuttall said the county collects the tax and gets to keep 2 percent of whatever is collected, with the remaining 98 percent going to the county tourism agency. In the case of Fayette County, the LHVB is the official tourism promotion agency for the region comprising Fayette, Somerset and Westmoreland counties.
According to information provided by the Fayette Chamber, since implementing a 3 percent tax in July 2002, Westmoreland County has generated approximately $750,000 annually. Westmoreland County retains 2 percent of that total for administrative purposes ($15,000) and their $30,000 grant to LHVB from their general fund has been discontinued.
In September 2002, Somerset County enacted a 3 percent tax, which generates about $650,000 annually. Somerset County retains 2 percent of that total for administrative purposes ($13,000) and their $21,500 grant to LHVB from their general fund has been discontinued.
According to the chamber information, in Fayette County, a 3 percent hotel tax is estimated to generate approximately $550,000 annually. Fayette County would retain 2 percent of this estimated collection ($11,000) and could discontinue its $20,000 yearly grant to the LHVB.
In addition to the hotel tax revenues being utilized for tourism advertising campaigns and marketing programs through the LHVB, a separate tourism grant program has been established in both Somerset and Westmoreland counties.
These grant programs are not a requirement of the room tax legislation, but were established voluntarily through partnership agreements between the LHVB board of directors and the boards of commissioners from Somerset and Westmoreland counties. The grants are awarded annually to tourism-related business (non-profit and for-profit businesses may apply) and must be utilized for either a marketing or capital improvement project that will increase visitation to the region or enhance our tourism product.
Each county has worked with LHVB to design its own specific program.
Each county chose to use a different percentage of revenue in creating its grant program.
In Westmoreland County, 33 percent of the total room tax collected is specifically designated for the annual tourism grant program. In 2006, 25 grants were awarded totaling $255,275.
Examples of the projects that received funding include Living Treasures Animal Park, $10,000 for a capital project to expand the aviary exhibit, and Palace Theatre, $17,000 for a comprehensive marketing campaign targeting visitors in Cambria, Somerset and Indiana counties.
In Somerset County, 40 percent of the total room tax collected is specifically designated for the annual tourism grant program. In 2006, 40 grants were awarded totaling $279,300. Examples of the projects that received funding include: Meyersdale Area Historical Society, $14,000 for a capital improvement project to complete renovation of the historic train station welcome center (at the trail head of the Great Allegheny Passage), and Pennsylvania Maple Festival, $10,000 for capital improvements to Festival Park. This annual event attracts over 15,000 visitors every year.
Back in early 2001, not long after the legislation became law, the prior board of county commissioners, which consisted of Sean M. Cavanagh, Ron Nehls and Vincent A. Vicites, said they were against implementing the tax at that time, but the issue has never come before the board of commissioners for a vote.
In February 2001, Nehls said he was against imposing the tax because the money couldn’t be spent by the county, while Cavanagh and Vicites, both of whom will be on the Democratic ballot on May 15, said they weren’t in favor of levying the tax at that time. Vicites is the only Democratic county commissioner currently in office.
Until now, the proposed hotel tax has never resurfaced as an issue.
During Monday’s candidate’s forum, each of the seven candidates will have the opportunity to make a two-minute introduction and will randomly select two questions each to answer.
Nuttall said a total of 14 questions have been written for the forum and each of the candidates will select their questions inside two sealed envelopes. She said the questions vary and include the topics of tourism, workforce development, economic development, housing and infrastructure. Nuttall said specifically there are two questions regarding the hotel tax and two questions about tourism. She said all 14 questions came from the membership of the Fayette Chamber of Commerce.
Nuttall said she has received confirmation from all seven county commissioner candidates that they will attend the forum.
In addition to Vicites and Cavanagh, the other Democratic candidates seeking the two nominations are John “Toots” Croftcheck, John “Sonny” Mikita and Vincent Zapotosky. Republican commissioners Joseph A. Hardy III and Angela M. Zimmerlink are the only two Republican candidates seeking their party’s two nominations.