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Wednesday, 09 November 2011 21:28

Is room tax hike aimed at helping scenic railroad?

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Opponents to a proposed room tax increase in Jackson County are accusing county leaders of secretly earmarking the money for a grant to the Great Smoky Mountains Railroad.

“If this is about raising funds to get the railroad to move back to Dillsboro, then we are against it,” said Hanneke Ware, owner of the Chalet Inn, at a public hearing on the room tax increase this week. “It is not right to increase the accommodation taxes in a county as widespread as Jackson to provide marketing money to a private business.”

The scenic tourist railroad has asked the county for as much as half a million dollars in exchange for offering steam engine train service to the tourist village of Dillsboro.

The train, once headquartered in Dillsboro, cited the flagging economy when it pulled out in 2008. Dillsboro’s galleries, gift shops and restaurants were thrust into a tailspin over the sudden loss of 60,000 tourists annually.

While the train has since brought limited passenger train service back to Dillsboro, business owners worry the train won’t stick around and still pine for the same level of foot traffic they once enjoyed.

County Commissioner Mark Jones, who spoke to commissioners during the public hearing in his capacity as head of the Cashiers Area Travel and Tourism Authority, said if a tax increase is needed to help the train, perhaps Dillsboro should levy it. In Macon County, Jones pointed out, the county levies a 3 percent tax and the town of Franklin levies an additional 3 percent tax there.

County leaders say there is no connection between the proposed room tax increase and the financial assistance being sought by the railroad.

“We don’t have a motive,” said Commission Chairman Jack Debnam.

Anyone who thinks the room tax increase is aimed at raising money to give the railroad is misinformed, Debnam said. The county has bandied the idea around but is not close to a deal, Debnam said. (see related article)

Several speakers opposing the room tax hike believe there is a connection, however.

“Why are they asking the county for money?” Ware asked.

She said the railroad should do what other businesses do when expanding: namely, get a bank loan.

“Is it because they don’t have collateral?” Ware asked. “If they can’t get a loan, why would the county want to put money into a business whose financial plans are tenuous?”

Henry Hoche likewise questioned why the tourist railroad needs money from the county.

“To me it makes no sense why the railroad isn’t paying for it itself,” said Hoche, owner of Innisfree Inn By-the-Lake in Glenville.

Giving tax money to private business in exchange for creating jobs isn’t exactly a new concept. Incentives to land new industry are common at the state level, and counties often get in the game by offering tax credits to lure new companies offering jobs.

Jackson County has a revolving loan fund designed to help businesses moving to or expanding in Jackson County. Al Harper, the owner of the railroad, previously estimated 15 to 20 news jobs would be created under his plan to base a steam engine train in Dillsboro — a plan predicated on financial help, however.

County Manager Chuck Wooten said the Great Smoky Mountains Railroad steam engine project would not create enough jobs to qualify for the size of the revolving loan request, however.

It wouldn’t matter anyway, Wooten said, because the railroad has since told him it can’t take on any more debt.

Spin-off jobs created by other businesses, such as the tourist-oriented shops in Dillsboro, wouldn’t count toward the job creation quota the railroad must meet, Wooten said.

The scenic railroad wants to base trips on a restored 1913 steam engine and rail cars in Dillsboro, but there’s a hitch. The train is in Maine, and it would cost more than $400,000 to move it down to Dillsboro, the railroad estimates. It wants the county to split the cost, plus pony up money to help advertise the new steam engine service.

Currently, tourism tax dollars can only go to marketing and advertising, not to hard costs like steam trains. The narrow criteria were imposed by the state in the 1980s when counties first began charging lodging taxes.

A few years ago, the law changed. Room tax can now fund “tourism-related expenditures,” which can include walking trails, festival bleachers, boat docks, or perhaps a stream train — anything that would presumably lure tourists. The state allows up to one-third of a county’s room tax dollars to go toward such “tourism-related expenditures.”

If Jackson County wants this flexibility, however, it has to adopt new language at the local level reflecting that. It has become part of the discussion over whether to increase the room tax, along with revamping the tourism oversight agency that controls the money.

Clifford Meads, general manager of High Hampton Inn in Cashiers, doesn’t like the idea of tourism tax money going to projects instead of strictly promotions.

“There will be people dreaming up projects so they can spend the money,” Meads said.

Meads said shipping money from other parts of the county to help Dillsboro is “going to be divisive.”

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