Published: September 08, 2008 04:33 pm      

City and county at odds over hotel tax

Ada — By Talina Turner and

Loné Beasley

Ada Evening News



Controversy over who should control local hotel/motel tax funds is brewing between city and county officials that one side would like to see settled by voters, the other side by the state’s attorney general.

In July 2006 Pontotoc County voters overwhelmingly approved a five percent tax placed on hotel/motel room occupancy. In two years this new tax generated just over $438,000 that goes to funding Pontotoc County Agri-plex maintenance and operation, as well as to “promote, encourage, and develop tourism and recreational activities beneficial to Pontotoc County.”

Ada city councilors say they have been “boxed in” by high local tax rates brought on by a subsequent vote (also pushed by county commissioners) approving an additional tax on city retail sales to fund courthouse renovations and construction of a new jail.

“Our sales tax is so high in Ada that we feel the (county) commissioners took the last percentage of sales tax available to fund the building and operation of the county jail, and the hotel/motel tax goes toward the Agri-plex,” said Ada Mayor Barbara Young. Last month city counselors voted to redirect hotel/motel tax collections to the city of Ada.

According to Young and Alvin Files, city attorney, the city is perfectly within its legal rights to do so because, they say, the state statute addressing this issue says the city takes precedence over the county.

“The law is written to give the city priority in collecting the tax, probably because most hotels are located within the city limits and the city has to provide all the infrastructure to get the hotels to come,” Young said.

District Attorney Chris Ross disagrees. “If we have to go to court to enforce (the hotel/motel tax), we will,” Ross said on behalf of county commissioners. “I can’t read (the statute) the way they’ve interpreted it,” he said. “From the language of the law, the city would have already had to have one for the statue to apply. But in this case, it’s the reverse.”

Ross sent a letter to the attorney general asking his opinion. “I think it’s something we needed to find out for two reasons,” Ross said. “One, will the county still receive the tax and two, so the voters will know what they are voting on come November.”

In addition to the $438,000 in taxes collected, agri-plex events have generated another approximately $219,000. Of these combined amounts, over $418,000 has been spent on cleaning, renting paint guns, signs, rock for the parking lot, payroll, maintenance, and getting the agri-plex in compliance with the Americans with Disabilities Act.

Young said city councilors envision appointing an advisory committee consisting of people representing local hotels, ECU, restaurants, the agri-plex, chamber and others to guide where funds may be best used.

Young said the tax could be used to improve, construct and maintain recreational facilities such as municipal pools and baseball fields, as well as to market the agri-plex and bring in more activities.

“If it is marketed properly, the agri-plex could offer many more events for people to enjoy than it has in the past,” Young said. “We could also offer to help to market events that occur within a 20

or 30 mile radius of Ada since that would get the overnight stays into Ada’s hotels/motels.

“There is even a provision in the proposition to enable us to return a small percentage to the hotel/motel operators to compensate them for collection of the tax that they could use for their own advertising,” Young said.

“We’re looking at something the most people from our area could get the best use from,” Young said. “If we don’t have a plan or a funding stream, we cannot accomplish it. We’re just trying to elevate our community and bring a better quality of life for those who live here and visit here and to show them there’s something to come back for.”

In the meantime, Ross and county commissioners are waiting for the attorney general’s response. The proposition addressing the tax issue will appear on the November 4 ballot, along with presidential elections. Oddly, depending on how the attorney general rules, passing the measure in November could double the hotel/motel tax, with both the city and county getting five percent. Neither side appears to favor that happening.