Glasgow Daily Times, Glasgow, KY

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February 15, 2012

Commission discusses restaurant tax

By GINA KINSLOW Glasgow Daily Times

GLASGOW — Members of the Glasgow-Barren County Tourist and Convention Commission discussed proposed legislation Tuesday regarding the levy of restaurant taxes.

The legislation, House Bill 368, calls for amending Kentucky Revised Statute 91A.400 to allow cities to charge a restaurant tax that is not to exceed 3 percent of the retail sales by all restaurants in the tax jurisdiction  and that the tax revenue be divided between the taxing jurisdiction and the tourist and convention commission.  It further states a minimum of 25 percent of the tax revenue will go to the local tourist and convention commission, while the taxing jurisdiction may retain up to 75 percent of the revenue for use of quality of life expenditures supporting tourism, recreation and economic development.

Mayor Rhonda Trautman explained during the meeting that it would be up to each city to levy the tax regardless of its classification. First-, second- and third-class cities are now prohibited from levying a restaurant tax, but cities that have a classification of four or higher can levy such a tax. Glasgow is a third-class city.

“The Kentucky League of Cities (KLC) supports this bill in that it levels the playing field for cities of the different classes to make that choice locally,” Trautman said.

Trautman couldn't say if the bill passed whether  the Glasgow City Council would consider implementing the tax, but if it did the city could collect a substantial amount of tax revenue.

“To give you an example, the classification system now is one through six. E-town is a fourth-class city. They are able to implement the tax and they did a year or so ago. They are bringing in almost $4 million a year on this restaurant tax,” she said.

At present 100 percent of restaurant tax revenue go to tourist commissions in each Kentucky county.

“Now the way the bill reads, a minimum of 25 percent would go to the appropriate tourist group. That doesn't mean that 100 percent of it couldn't go to the tourist commission if the city chooses to do that,” said Ernie Myers, vice president of the Glasgow-Barren County Chamber of Commerce. “The potential is there for great gain for the city of Glasgow and for this tourist commission; excellent gain.”

 The proposed legislation “more or less is a way to remove the classification system,” Trautman said.   

“The reason it is an issue is you have cities like E-town who have fought getting reclassified as their population has grown because they have allowed to do this tax as a fourth-class city,” she said.

She continued that the city of Elizabethtown had a larger population than the city of Glasgow.

“The classification system seems to be issue here now, in my opinion, and that is the reason the KLC is supporting it is that it removes that and gives the cities the local choice of doing this regardless of their size,” Trautman said.

House Bill 368 was introduced to the Kentucky House of Representatives on Feb. 2 and referred to the House Appropriations and Revenue Committee on Feb. 6.

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