Politics & Government

Clock ran out on bill to increase Lexington's hotel, motel tax to support Horse Park

In the waning hours of the 2013 General Assembly, Gov. Steve Beshear asked lawmakers to raise revenue for the Kentucky Horse Park by allowing Lexington's urban-county government to increase the hotel and motel tax from 6 to 7 percent. But the bill died just short of becoming a law.

The enabling legislation — made through an amendment to a bill unrelated to the Horse Park — came on the last day of the session. Beshear said in a statement Thursday that he "asked the General Assembly to consider giving Lexington that option."

Beshear said he and Mayor Jim Gray "have had conversations in the past about various ways to give more support to the Kentucky Horse Park and other potential local projects, including the possibility of increasing the bed tax."

Susan Straub, spokeswoman for Gray, said that "establishing a new source of funding for the Horse Park has been a topic of ongoing conversation among Horse Park Executive Director John Nicholson, the legislature and the governor.

"The mayor agrees the Horse Park is very important to Lexington," Straub said, noting the park had 800,000 visitors last year and an annual economic impact of $180 million.

"We're continuing the dialogue," Straub said. "An increase in the hotel/motel tax represents just one option."

A 1 percent increase in the hotel tax is projected to raise about $1.2 million a year. Legislators have wanted the Horse Park to break even, and the park last year developed a business plan to put it on the road to self-sufficiency by 2020.

Nicholson said Thursday he had been "in active dialogue with the governor and the General Assembly as to new revenue streams for the park, and those discussions have included the possibility of the park receiving a portion of the hotel tax. We look forward to these discussions continuing in the months ahead."

Nicholson added: "The Horse Park fills a tremendous amount of hotel rooms and has, in effect, become a second convention center for Lexington."

Lexington needs the state legislature's permission to raise the 'accommodations tax" on hotel and motel rooms. House Bill 57 passed 27-10 in the Senate and 49-38 in the House on Tuesday. The House vote came at 11:48 p.m. Tuesday, 12 minutes before the 30-day legislative session ended.

However, the bill will not go to Beshear for his signature because it was not "enrolled," meaning the clock ran out before House Speaker Greg Stumbo and Senate President Robert Stivers could sign it, said Brian Wilkerson, a spokesman for Stumbo. That means it won't become a law.

"It never left the chambers," Wilkerson said. "It was not enrolled, so it did not go to the governor's office."

Executives with Lexington Center, the Lexington Convention and Visitors Bureau, and the Bluegrass Hospitality Association all said they didn't find out about the bill until Tuesday or Wednesday.

Mark Ravenscraft, president of the hospitality association, a group of 70 executives representing hotels, restaurants and tourist attractions, said he didn't learn about the bill until Wednesday morning, hours after the legislative session ended.

"BHA and the lodging community had no knowledge of this," Ravenscraft said. "It did catch the attention of the lodging community, to be sure."

But had the bill passed, Straub said, "any decision to raise the tax would have required action from the Urban County Council. During that process, the public and stakeholders would certainly have opportunities to express their opinions."

'The Senate just did it'

Originally, HB 57 was a bill relating to the expungement of non-felony convictions. An expungement is the process taken to remove an offense from public records so that it is as if the offense never occurred.

On Tuesday, the last day of the legislative session, state Sen. Bob Leeper, I-Paducah, added three amendments to the bill, none of which had anything to do with expungements. One amendment would have allowed an urban-county government to impose an additional room tax "not to exceed 1 percent."

Lexington has the only urban-county government in the state; Louisville has a different form of merged government.

The amendment said the additional tax "shall be used to support community development." The amendment did not mention the Horse Park and did not define what "community development" means.

Leeper, chairman of the Senate Appropriations and Revenue Committee, said the first he heard about the amendment was "in the discussions with the governor's office. The staff presented something that he (Beshear) was interested in, and they thought" HB 57 "might be a vehicle for it."

Leeper said he doesn't remember who brought the idea to him. "I did not speak to the governor personally about it," he said.

State Rep. Brent Yonts, D-Greenville, a co-sponsor of the original HB 57 about expungements, said he first heard about the amendment late Tuesday when was he was approached by state Rep. Ruth Ann Palumbo, D-Lexington.

"She asked me if I had any objections to it, and I said, 'It doesn't matter if I have any objections or not, they're going to do whatever they want to in the Senate.' And they did," Yonts said.

"In fact, when she asked if I knew anything about it or had any objections to it, she indicated they'd already done it. The Senate just did it," Yonts said.

"I don't know really where it came from," Yonts said. "And I understood that Lexington wanted it, maybe for the benefit of the Horse Park, I don't know."

The language for the expungement of non-felonies passed in another bill, Yonts said. Palumbo could not be reached Thursday for comment.

Conferences and conventions

Jim Browder, president of the Lexington Convention and Visitors Bureau, said he was not aware of the proposal until Tuesday afternoon, when a staff member informed him about it.

Had he known about the bill, Browder said he would have discussed it with the Lexington-Fayette Urban County Tourist and Convention Commission.

In addition to a 6 percent sales tax, those who check into a Lexington hotel or motel pay a 1 percent state tourism fee and a 6 percent local "accommodations tax."

Of that 6 percent accommodations tax, 2 percent goes to the Lexington Center and 4 percent goes to the convention and visitors bureau.

The visitors bureau gives 1 percent to Lexington Center. The bureau uses the remaining 3 percent to promote Lexington as a destination, Browder said.

For example, "we have a sales staff that works on the convention business," he said.

The accommodations tax generates about $7.2 million annually, Browder said. In better economic times, the revenue can be higher.

Although Browder said he takes no position on an increased accommodations tax, he said Lexington must be careful not to have a tax so high that conferences and conventions would choose to go elsewhere.

"We would want to make sure that our prices and taxes aren't getting so high to the point that we are having difficulty competing with another city," Browder said. "Meeting planners certainly look at that."

An increase in the hotel tax was used in 2000 to pay the multi-million-dollar bond for the expansion of the convention center, said Lexington Center President Bill Owen.

In August 2000, a petition that included an increase in the hotel tax failed to get enough signatures to put the issue on the ballot. The petition was part of an effort to place tax increases for farmland preservation on the November 2000 ballot. That proposal would have increased wage and property taxes as well.

State law allows an urban-county government to increase the hotel tax as a way to raise money for the preservation of farmland through purchase of development rights. But Browder and Owen said that has never been levied for Lexington's PDR program.

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