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Public Notices

April 23, 2014

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County To Hire Firm To Examine
Hotel/Motel Tax Collections

Sun Photo by Kristen Buckles

Greene County Clerk David Thompson, at left, and Mayor Alan Broyles discuss the county hotel/motel tax during Wednesday’s meeting of the Greene County Budget & Finance Committee.

Originally published: 2014-02-06 11:03:31
Last modified: 2014-02-06 11:20:09

County To Hire Firm To Examine Hotel/Motel Tax Collections



Hotel and motel tax collections from a few entities the county suspects have not been submitting their portion of the tax will soon come under audit.

Greene County Mayor Alan Broyles told the County Budget & Finance Committee Wednesday that he will sign a contract with Tax Management Associates, of Charlotte, N.C., to conduct audits of certain hotels and motels in the county.

In December the Greene County Commission approved employment of a third-party auditor to review the collections and to be paid up to $10,000.

The auditor is to take those funds proportionately from the various beneficiaries of the tax (including tourism, economic development, debt service, recreation and performing arts).

County Budget Director Mary Shelton said that the financial firm's offer was by far the best the county received for conducting the audits.

Such an audit collects only information about the number of guests, the revenue collected, and the amount remitted to the county from local hotels and motels.


The firm will only audit three or four companies under the one-year contract, at a maximum cost of $800 per audit, Shelton said.

Greene County Partnership President and CEO Tom Ferguson suggested that the county confer with Tourism Director Tammy Kinser as to which companies the firm should audit.

"Tammy follows your monthly report," he said. "She could probably tell you better than anyone what properties are suspect.

"We know there are properties that haven't been paying anything until about eight-to-nine months ago, when [County Attorney] Roger Woolsey sent a letter out," Ferguson added.

"Now they're starting to pay a little, but it's very suspect because some pay the same every month, and that can't be possible."


County Clerk David Thompson's office collects the tax at a rate of 7 percent on the cost of lodging.

Thompson forwards the revenue to County Trustee Dan Walker, who then reports the collections.

Last year, county officials began to suspect that not all funds that were owed had actually been submitted.

Mayor Broyles had announced his concern in April during a Budget & Finance Committee meeting, saying that some motels may be collecting the funds but withholding them from the county.

A private act of the Tennessee General Assembly created the local hotel/motel tax.

In a followup interview last April, County Attorney Woolsey said that the Greene County Partnership, which receives much of the hotel/motel tax revenue from the county, was the entity that discovered that some companies might not be filing any tax returns with the county at all.

"[Thompson] is providing me with a list of who's collecting and who's not collecting. Then we've got to try to identify those entities who are not filing those reports, not collecting -- and not paying, of course," Woolsey said at the time.


Thompson said he was not aware, until these discussions arose, that state law requires his office to conduct an annual audit of each lodging operator at least once a year.

His office is also required to report on the audit quarterly to the County Commission.

He made the first such report of his seven-year tenure in office in December, saying then that his office was early in the process, having audited only about a half-dozen entities.

Thompson said on Wednesday that he will have employees accompany the financial firm on their audit in order to learn how to take over the task.

"Once my people start doing that, certainly we can [audit all the hotels and motels] without any cost," he said.


Until the financial firm's audit is complete, committee members agreed that they would not take up another ongoing issue with the hotel/motel tax allocations.

The Budget & Finance Committee sent a resolution to the County Commission for approval in December that would have budgeted all the county's revenue from the hotel/motel tax's allocation for "performing arts" to the Niswonger Performing Arts Center (NPAC).

This committee recommended the change after hearing from Greeneville businessman and philanthropist Scott Niswonger and from county commissioners who said funding NPAC was the only intended use of that portion of the tax when the county increased the tax in 2004.

Niswonger contributed $5.2 million of the $7 million cost of the performing arts center.

The resolution to increase the tax mentioned the words "performing arts" but failed to include the word "center," Niswonger said.

As a result, county commissioners have budgeted monies from this portion not only to NPAC but also to other local performing arts organizations in the years since the tax was increased.

NPAC currently receives $10,000 annually from this portion of the tax.


Extensive discussion of the subject in the County Commission's Republican caucus meeting in December prompted the commission to pull the resolution from the agenda at the start of the December commission meeting in order to further study the issue in an ad hoc committee.

At the committee's only meeting to date, Chairman Bill Moss said members were tasked with forming a recommendation for the Budget & Finance Committee.

Members heard from most of those organizations receiving a portion of the tax.

Then the committee adjourned, offering no specific recommendation, "except that [the Budget & Finance Committee] take a hard look at the various [allocations] and attempt to get everything in the right pot," Moss said.


The Budget & Finance Committee did not intend to take up the issue at all on Wednesday, but did so briefly after individuals in attendance, including Ferguson, Kinser and Director of Schools Dr. Vicki Kirk, explained that they were attending to hear such discussion.

Ferguson and Kinser were present to support maintaining current hotel/motel tax funding for tourism and economic development, while Kirk supported maintaining funding for education debt.

Broyles emphasized repeatedly through the discussion that the only step needed for any change is a two-thirds vote by the County Commission.

"We're kind of splitting hairs as to what is 'performing arts.' Someone's always going to [...] have a better mousetrap that you might send this to," the mayor said.

"The whole thing can be restructured in any way that you all want to," he said. "What we need to do is wait until the audit is completed. That will put it in the middle of budget time."


At that point, committee members agreed that it will be necessary to review meeting minutes from 2004 and other "facts."

Shelton brought in the minute book, which said only that the resolution to increase the tax was approved. That attached resolution reads, as it does today, with "performing arts," not "performing arts center."

Commissioner Hilton Seay commented on The Greeneville Sun article from that time, which said that, "[Then-Mayor Roger Jones] said one possible use of the money designated for the performing arts would be to support the Greeneville-Greene County Performing Arts Commission, a 501(c) nonprofit corporation with representation from city and county government that would lease and operate the new performing arts center for the benefit of the entire community."

The article later listed other proposed uses for the funds, including support of the Capitol Theater or programs at Tusculum College.

Another portion of the article states that Jones said there would be no "automatic flow-through" of funds to any source, requiring instead an annual approval from the County Commission.

"Quite frankly, I was pretty well convinced of it, that it said that it was to go to the 'performing arts center,'" Seay said. "But that's not what research shows; research shows 'the performing arts.'"

"I want to make sure for my vote that I've heard all the evidence. Hearsay is not very admissible, particularly when it's 10 years old," Bird said.

He said that he would not make a decision until seeing some specific indication in the minutes that the wording should have contained "center."

Seay agreed that minutes and evidence would need to come under consideration.

Ferguson supported this, thanking commissioners for focusing on "facts."

"Wherever you put your money, ask them, 'What is your return on investment?' Because we can show returns on investment both in tourism and in economic development," Ferguson said.

He pointed to a report from the Tennessee Department of Tourist Development, which bases its report on the data collected by U.S. Travel.

According to that report, every dollar Greene County government invests into the Partnership's Tourism program has a $19 return on investment.

The meeting adjourned with the committee agreeing to take up the matter after further review of meeting minutes pertaining to the allocation of the hotel/motel tax revenue.

For more information and stories, see The Greeneville Sun.

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