Sacred cow or golden goose?

“There’s an old saying in politics: Don’t tax you, don’t tax me, tax that fellow behind the tree.”

— state Rep. Martin Nesbitt

They come in droves to gawk at our peaks, walk our trails, sample some cuisine, and pay homage to the mansion where Hollywood filmed Ritchie Rich. And by the way, the economic impact they leave in their wake amounts to roughly $1 billion annually, according to folks in the know.

“They” are the tourists, those strangers who live and move among us in a most transitory fashion. Collectively, however, these ephemeral envoys from far-flung lands have left a mark on Asheville that rivals the contributions of lifelong mountaineers — at least in economic terms. And these visitors have also left their footprints in other, subtler ways. After all, not all of the litter, air pollution and general wear and tear affecting city streets and facilities is caused by locals. But therein lies the dilemma faced by any gracious host: How do you maintain what you have — in this case, making sure that Asheville remains a jewel of a city both to live in and to visit — without unduly burdening either yourself or your guests?

It’s a money question, really — the kind that isn’t typically asked when the economy is strong and the living easy. With the state facing a billion-dollar deficit, however, and the governor withholding funds from cities and counties (Asheville is still waiting on $2.7 million worth of promised reimbursements from the state), times are tough and the fiscal finger-pointing has begun.

Who pays???

One of those fingers belongs to Asheville City Council member Joe Dunn, who believes it’s time to start asking tourists to pay a little more for their stay here. He wants Council to try to persuade our representatives in Raleigh to introduce a bill that would raise Buncombe County’s hotel-room tax by 2 cents; the money would be earmarked for helping maintain Asheville’s infrastructure. Buncombe County hostelries took in nearly $100 million last year; $2 million could definitely patch some pavement.

For Dunn, it’s a matter of investing in the future: “These people come here and enjoy the beauty and leave. … But let me tell you something: They’re not going to come back if the streets are filled with potholes or if they trip over a broken sidewalk. We need to do something.”

A little more than nine months ago, Dunn secured his place at the Council table by netting the most votes of any candidate. Backed by that mandate, Dunn has wasted no time in trying to fulfill his campaign promise to “cut the fat” — whether it’s in the city budget or the Unified Development Ordinance. Dunn hasn’t shied away from controversial votes, either: He single-handedly defeated an affordable-housing initiative for Chunn’s Cove, and he stood alone in opposing recent annexations.

Dunn likes to describe his philosophy as a “common-sense approach,” and it seems fair to say that he’s one of the more politically conservative members of the current city government. Yet in this case, he’s taking up a torch first lit by former Mayor Leni Sitnick, who called for raising the room tax during her administration. Sitnick has been called many things, but not “conservative.”

To Dunn, however, it’s not a question of liberals vs. conservatives. Instead, he sees the tax increase as a natural outcome of his analysis of where the city gets its money — and how it spends it. Too often, he said in a recent interview with Xpress, that money is spent on “sacred cows, such as Parks & Rec and entertainment.” And city taxpayers, he notes, often shoulder the whole economic burden through their property taxes. So if the city isn’t prepared to cull its herd of “sacred cows,” Dunn proposes adding another one. “Why can’t streets and sidewalks be sacred cows? More people use them,” he added pointedly.

Dunn is willing to go out on a limb and speak the T-word as a way to raise the needed money — provided that the people footing the bill don’t vote in local elections. “I see this as a way of raising revenue without affecting local folks. … Charging tourists is not costing locals anything at all.”

Spreading the word

But Dunn is facing an uphill battle. Just last year, the legislature approved a 1-cent increase in Buncombe County’s room-tax rate, bringing it to 4 cents. The revenue goes directly to the Chamber and the TDA — 3 cents to fund an advertising campaign (coordinated by the Convention and Visitors Bureau) promoting Asheville as a vacation destination, and 1 cent to the newly created Tourism Product Development Committee.

Both the tax increase and the committee that oversees and spends it resulted from a study commissioned by the Chamber two years ago. The study concluded that while Asheville enjoys a healthy tourism economy, its growth is slowing. Furthermore, of the 6 million people who visit Asheville annually, only 2 million stay overnight. The conclusion was simple: Get those tourists to stick around longer than one day. Thus it was decided to establish a Tourism Product Development Fund that would loan or grant money to selected individual and organizations looking to develop an entertainment venue, conference center, athletic facility or similar attraction that could motivate tourists to extend their stay.

According to Marla Tambellini, assistant vice president of the Asheville Convention and Visitors Bureau (an arm of the Chamber of Commerce), the first proposals for a piece of that seed money are being submitted now; the committee will review them after the Aug. 14 application deadline. Tambellini also noted the trickle-down effect that both the advertising and “product development” projects have for the entire region. Hotel and motel owners, she said, “are taxing themselves to ensure that that $1 billion impact remains strong for our community. Marketing brings in more visitors; in turn, the money these people spend in restaurants and shops goes into our community. … Tourism accounts for more than one-third of all retail expenditures in our area. And that generates sales tax that goes to the state, the county and the city.”

Tambellini added that the marketing campaign has become even more important now that travelers are discovering that tourism in the Southeast extends beyond Orlando’s Magic Kingdom. “There’s competition; Gatlinburg has $8 million to spend promoting their area. We have one-and-a-half million. [Tambellini noted that the balance of the revenue collected, roughly another $1.5 million, is used for “additional marketing” — brochures, maps, newsletters and other materials, as well as administrative costs.] People don’t realize that the Smoky Mountains are here, too. To succeed in this business, you’ve got to advertise.”

That advertising, though, is what raises Dunn’s conservative ire. “I think it’s strange that a business taxes itself and turns around and uses that money for advertising. It’s a write-off. It’s a subsidy for this business,” Dunn opined.

Don’t mess with success

One of the strongest voices opposing Dunn’s idea comes from a third-generation Asheville hotelier with nearly two decades of experience promoting the local tourism industry. John Winkenwerder is managing general partner of the three Hampton Inn Suites hotels in town. In an interview with Xpress, Winkenwerder took issue with Dunn’s view of the way hotel owners boost their customer base — from the unique perspective of having served nearly 17 years as a member of the Tourism Development Authority.

“I was the first vice chair of the TDA under William Cecil Jr. back in 1983, when we got the first room-tax rate passed. We were the first county in North Carolina to pass one, along with Haywood and McDowell. Initially, we had tremendous opposition from the hotel-and-motel industry, but we knew it was a challenge we needed to overcome in order to grow the industry — remember, we were asking them to tax themselves. It was a tough process, but we succeeded. Advertising is the only way we would ever be able to build a ‘brand’ for Asheville. Looking back over the past 20 years, I’d have to say it’s worked: We’ve been able to successfully brand Asheville and put it in a favorable light. It used to be when you told someone that you were from Asheville, they thought you were talking about that city in Tennessee with the country music. Now, when you tell them, they say, ‘Oh, what a lovely place.'”

Winkenwerder also had the numbers to back up that success story. “In 1983, the economic impact of tourism here was around $198 million. Today, it’s more than $1 billion. The revitalization downtown was created by a whole lot of dedicated people with vision, but it wouldn’t be what it is today if only local people supported it. It wouldn’t have been enough.”

Current TDA Chairman Chris Cavanaugh (he’s also vice president of marketing for Biltmore Estate) echoed Winkenwerder’s sentiments, noting that because tourism is such a high-profile industry, it often draws criticism. “Tourism is a vital part of the economy, but it is only one aspect of a diverse economy,” he pointed out, adding, “We all want good streets and sidewalks, but we want to be part of the solution — and not the only part.” Often lost in the debate, he continued, is the fact that tourists staying in hotels pay not only the 4-cent room tax but also the 6.5-cent sales tax. “They’re already paying ten-and-a-half cents in taxes.” On top of that, hotels also pay a significant amount of property taxes, due to their large size — money that, he noted, goes directly to the city and county.

Dueling statistics

Buncombe isn’t the only county in the state with a room tax. And for Dunn, the way the members of the local legislative delegation have voted on such tax increases merits scrutiny. He gave Xpress a printout showing how each member of the delegation — Sen. Charles Carter, Sen. Steve Metcalf, Rep. Lanier Cansler, Rep. Mark Crawford, Rep. Martin Nesbitt and Rep. Wilma Sherrill — has voted on 14 separate room-tax bills for counties and cities across the state. More often than not, the delegation voted to raise the rates, according to Dunn’s data. So why not raise the rates here and put some of that money to uses directly benefiting city residents, wonders Dunn.

He also feels the delegation is treating its own constituency differently than it has treated other parts of the state differently by not allowing some of the current tax to be used for something besides promotional purposes. Durham County, noted Dunn, has a 5-cent room tax; 2 cents goes to their Convention and Visitors Bureau, with the rest divided between the county and the city of Durham for general use. Wake, Mecklenburg, Forsythe and Pitt counties all have 6-cent room taxes.

Marla Tambellini of the Asheville Convention and Visitors Bureau counters by providing her own numbers:

• Of the 108 counties and cities authorized to collect room taxes in North Carolina, 39 either never actually levied such a tax or have repealed it.

• 60 percent of the counties and cities that do levy room taxes direct all the revenue to the local TDA, just as Buncombe County now does.

Rep. Nesbitt, who’s represented his Buncombe County district in Raleigh for more than 20 years, sees little likelihood that the General Assembly would approve a 2-cent increase dedicated to the city’s infrastructure:

“This is a policy issue. It’s about whether a local government can ask one industry to pay for the general cost of running a city or county. It sends out the wrong message to industry, particularly those who are considering relocating here. If we did this, it would be like saying, ‘If you’re successful and have a large presence, we’re going to reach out and tax you.'”

Nesbitt characterized Dunn’s proposal as a way to “pay for what the people need without using the people’s money.” He added, “There’s an old saying in politics: Don’t tax you, don’t tax me, tax that fellow behind the tree.”

More than likely, however, the room-tax debate will continue to simmer as long as the neon “Vacancy” lights hum over local motels. And if Dunn wants to pursue his idea, he’ll have to overcome the opposition of a dedicated group of tourism advocates who seem to be speaking with one voice. On separate occasions, Tambellini, Winkenwerder and Nesbitt all admonished: “Let’s not kill the goose that laid the golden egg.”

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