Lodging tax up for vote in Washington County, Tenn.

JONESBOROUGH, Tenn. (WJHL) — Washington County commissioners are set to consider increasing the tax on hotels and short-term lodging facilities to go toward tourism, and a local tourism industry says the devil will be in the details.

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County commissioners will consider a resolution Monday to increase hotel-motel taxes in Johnson City by 1% and those in Jonesborough by 3%. It would also create a 4% tax for short-term rentals (such as Air BNB’s) located outside Johnson City and Jonesborough’s corporate limits.

The proposal, first floated informally by County Mayor Joe Grandy at a March 14 Budget Committee meeting, was fleshed out in this month’s Commerce, Industrial and Agriculture (CIA) Committee meeting April 4. That committee approved by a 5-0 vote to craft a resolution for the full commission to consider.

It’s nearly identical to a measure the Sullivan County Commission passed last year. According to Tennessee law, the money such a tax brings in must be used to promote tourism.

“What we wanted to do was to mimic some of the things they did so that it would keep the total market in the region sort of at the same level without creating one town or one city different than the others,” Grandy said.

That’s why the increase is 3% for Jonesborough and just 1% for Johnson City, as it will bring both locations to the 8% total local lodging tax put into effect last year for Kingsport and Bristol. Sullivan County added 3% to Bristol’s pre-existing 5% rate and 1% to Kingsport’s 7%.

Grandy said that uniformity helps prevent “one city competing against the other over something as silly as 1% of a motel occupancy charge.”

Visit Johnson City Director Brenda Whitson spoke at the CIA meeting and plans to address the full commission Monday. She said some of her initial concerns were whether there had been “thoughtful considerations” about the proposal, “to make sure that we’re not going to lose business or that we’re going to lose our competitive edge?”

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That’s a concern that was shared by Jonesborough Bed and Breakfast owner Brian Mills shared.

“My question is, are they are they going to cut off their nose to spite their faces?” Mills wondered. “If it hurts people coming into Jonesborough there’s going to be some blowback.”

Mills’s guests currently pay a 14.5% tax rate above his lodging rate, which includes 9.5% sales tax and Jonesborough’s existing 5% lodging tax.

He said for the occasional guest who asks about tax rates, “that’s not a good feeling to have when you’ve already provided excellent service for the client and then they’re already upset about paying 14.5%. So I can’t imagine why an extra 3% is going to make them any happier.”

Whitson’s organization is funded by Johnson City’s 7% city lodging tax, which brought in more than $4.6 million in 2023. Half the total went to the Visit Johnson City (the Convention and Visitors Bureau.)

Based on that 2023 revenue, just the 1% Johnson City tax would generate about $460,000 for the county. State law requires that money go toward tourism initiatives, though that isn’t narrowly defined.

“It’s very important any time you do any kind of tax increase, that there be a lot of thought that goes into it,” Whitson said. “But more importantly, that there is a plan that’s put together.”

She said that’s the message she and Northeast Tennessee Tourism Association Executive Director Alicia Phelps will be communicating to county commissioners Monday. The resolution says that the funds would be collected by the county and any appropriations would need county commission approval.

“We are the tourism experts. We do this 24-7 and … if there is a committee that’s put in place that has a commission member on it and maybe some partners that we can help to direct a program that would market us in a cohesive way,” Whitson said.

“Not just any, you know, a shotgun approach, if you will, but it would be a total comprehensive marketing strategy that would be good for everyone.”

Grandy said he plans on such an approach.

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“Probably we’ll establish a small group that will work with our local and regional tourism folks to come up with some strategies on how some of this money can be spent,” Grandy said.

“I’ve spoken directly with the Jonesborough tourism folks and the Johnson City tourism folks and the regional tourism folks. They’ve all come together and are working as a team to begin to create some opportunities for ways that we can market our region to help bring some people here.”

Whitson said she hopes county leaders listen to people already doing tourism promotion in Tennessee’s 13th-ranked county for tourism revenue.

“Look to us as your experts that you can set the stage and set the standard of what it looks like when a county enacts a lodging tax, of how it can be done right and how it can be done with a lot of thought and a plan that’s in place that could have metrics and measures to go by.”

While Mills wondered whether an additional 3% tax could hurt his business, Grandy sounded convinced it wouldn’t make a dent.

“We raised three boys and they all did either travel swimming or travel soccer. We’ve been all over the place and we stayed in motel rooms for tournaments all over the Southeast and I’ve never once asked what the occupancy tax on a room was any place we every were, and I don’t think most people do.”

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