Lee signs new Nashville hotel tax to help fund Tennessee Titans stadium along with two other bills
Tennessee Gov. Bill Lee signed several bills into law on Wednesday that include an allowance for a 1% hotel-motel tax increase in Davidson County to pay for a new estimated $2.2 billion Tennessee Titans Stadium.
Lee also signed a bill that will allow the Chattanooga Lookouts to collect 5.5% of the state sales tax at the stadium to pay for a new stadium and another bill that would require restitution be paid by DUI offenders who kill the parent of minor children.
A fiscal note on the hotel-motel tax bill estimates that it could be worth $10 million a year as county hotels are allowed to increase the hotel-motel tax by 1% on all stays. The revenue will be deposited into a Metro Nashville Sports Authority account to pay part of what is expected to be $1.5 billion in public funding for a new stadium.
Tennessee also has committed $500 million in direct funding for a new stadium in a budget appropriations bill that remains on Lee’s desk to sign. Last year, the state passed a bill that will allow 5.5% of the state sales tax at the stadium and $3.5% of the state sales tax in a new planned mixed-use development around the stadium to be sent to the same account to pay down bonds on the stadium.
All of the local sales tax in both areas will also go toward the stadium cost. In a capital proposal from Nashville Mayor John Cooper, the taxes were described as “user-generated sales tax, tourism-oriented sources such as the Hotel Occupancy Tax and related funds.”
But economist J.C. Bradbury of Kennesaw State University in Georgia has pointed out that the new stadium and development will not increase overall sales taxes collected in the region or state, so pledging those sales tax funds to a new stadium is the same as pledging general fund dollars to a stadium.
“To describe these funds as deriving from ‘user-generated’ taxes is disingenuous,” Bradbury said. “Are the taxes being collected 8 or 365 days of the year? Are hotel taxes being charged only to out-of-town game patrons? Such phrasing is intentionally deceptive.
“This isn’t a ticket tax. And of course they don’t propose a ticket tax, because that is no different than the team just charging higher prices on its own. The reason other taxes are used is because they need non-customer taxpayers to subsidize the stadium.”
Bradbury has also pointed out that, through economic study, it has been proven that hotel-motel taxes are not just paid by Davidson County visitors but the costs have a larger impact.
“Assume there is a hotel fee or tax rate (doesn’t matter if flat or %) on hotel night stays,” Bradbury said. “This requires hotel owners to remit that amount of tax revenue for each hotel night. Even though that amount may be listed on the bill, the total cost isn’t just passed along to the guest.
“The tax effectively raises the price to the guest. Some guests will simply just pay it, but the higher price deters marginal guests. Some guests may stay fewer nights (arrive early in the morning or leave in the evening), decide to stay with friends, or double-up on rooms, etc.”
The Lookouts stadium sales tax agreement comes as the team is considering building a new $86.5 million park on the 141-acre Wheland Foundry/U.S. Pipe parcel in the South Broad District. The Lookouts can keep the first 5.5% of the state’s 7% sales tax for sales at the stadium and would extend the deal to apply to non-baseball events at the stadium.
The DUI restitution bill, meanwhile, is modeled after a proposed law in Missouri that would require a DUI offender to be responsible for restitution in criminal court to help care for the children of someone who was killed during their DUI offense.
It is called Ethan’s, Hailey’s, and Bentley’s Law in recognition of the children of Chattanooga Police Officer Nicholas Galinger, who was killed on Feb. 24, 2019, “by drunk driver while removing debris from a road drain,” according to bill sponsor, Sen. Mike Bell, R-Riceville.
This article was originally posted on Lee signs new Nashville hotel tax to help fund Tennessee Titans stadium along with two other bills