In an effort to possibly gain revenues from a future restaurant tax, Corbin City Commissioners weighed the option Monday of possibly dropping the city from third-class city status to a fourth-class city.
Bert May, former Mayor of Mt. Sterling from 1986-1998 and a current lobbyist for the Kentucky League of Cities, explained the intricacies of any change to commissioners.
Currently, first through third-class cities don’t have the option of passing a restaurant tax due to state regulations. May said the League of Cities filed a bill last session of the General Assembly to change that law, but it was never considered. KLC’s proposal would allow revenues generated from the tax to be split between cities and tourism commissions within those cities. Seventy-five percent of the money would go to the city government and 25 percent would got to a tourism commission.
Right now, fourth class cities and below can impose a restaurant tax, but all the money must go to a tourism commission.
“The biggest opposition we had on this plan was the tourism commissions,” May said. “For the life of me, I can’t understand why they don’t understand that 25 percent of a whole lot of money is a whole lot more than 100 percent of nothing, but that was the case.”
May said there was also stiff opposition to the proposal from the restaurant industry.
City Manager Bill Ed Cannon said he estimates that about $600,000 to $800,000 annually could be raised from a restaurant tax of two percent.
May said if Corbin dropped its status, the money could be used for recreation purposes.
Corbin Mayor Amos Miller said he’s reluctant to make the drop to a fourth-class city just to pass the tax because it won’t boost the city’s direct revenues.
“I would like it a whole lot better if it was 75/25,” he said. “If that law gets passed, I’d jump for it. Right now, it don’t help us at all.”
Miller said the city could strike a deal with the local tourism commission to help shift some recreation expenses from the city, but called the idea a tenuous one.
“Anytime you make deals with people that are on boards … then as boards change, so can the agreements that you make. If we do a gentleman’s agreement, that’s very dangerous.”
Commissioner Phil Gregory said he is in favor to dropping to fourth-class status because it doesn’t appear the General Assembly plans to change current laws anytime soon.
“We’re going to have to go down to a fourth-class city,” he said. “We can work out an agreement. Eventually the law is going to change where they can do that 75-25 thing, but when will that be? It could be 10 years from now. We can’t wait that long.”
A drop to fourth-class city status would also mean the city does not have to employ a full-time fire department.
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