Rep. Jeff Smith said his opposition to Lowndes County’s failed request for an extension on its 2-percent restaurant sales tax was based on his belief that “new” tax should first be approved by the voters.
He said this despite the fact he voted for five similar measures without such approval in the most recent Legislative session.
“My view has always been the same,” the Republican legislator from Lowndes County said Wednesday following his appearance at the Columbus Kiwanis Club. “This (tax) was passed with the $325,000 threshold in 1986. I didn’t want to remove it unless the people had some sort of say-so in it. If the people back home want to pass a tax and it comes to the Legislature and it has a referendum, I’ll support it. But the new policy since January of 2012 is you have to have a referendum first.”
Other bills Smith supported in the recently concluded legislative session seem to contradict his “referendum first” claim, however. On March 13, Smith voted in favor of House Bill 1657, which allowed the city of Clinton to levy a 1-percent hotel tax without having voters approve the bill in advance of the legislation.
The language in the bill states: “Before any tax authorized under this act may be imposed, the governing authorities shall adopt a resolution declaring their intention to levy the tax, setting forth the amount of the tax to be imposed, the date upon which the tax shall become effective and calling for an election to be held on the question.”
That same language is included in four other local taxes approved by the Legislature — a hotel tax in Richland (HB1520), a hotel and restaurant tax in Grenada (HB1563), a restaurant tax in Vaiden (SB3067) and a restaurant tax in Southaven (HB1471). Smith voted in favor of all four of those bills, none of which had gone to the voters prior to being sent to the Legislature as Smith said was required.
However, since the Lowndes bill was presented as an extension rather than new tax, a referendum was not required. Smith and Chism have maintained that since the version of the tax presented to the legislature this session differed from the current tax, it is a new tax and should have required a referendum.
Smith and Rep. Gary Chism (R-Columbus) have faced criticism in the aftermath of Lowndes County’s failed effort to have its restaurant tax extended. Their opposition focused on a change in the law that both the city of Columbus and Lowndes County approved through a joint resolution that would require all businesses to apply the sales tax on prepared food and beverages regardless of annual revenue from those sales. The law previously required only businesses with at least $325,000 in annual prepared food and beverage revenue to collect the tax from its patrons on those items.
Besides the city and county, both the Columbus Convention and Visitors Bureau and Golden Triangle Development LINK expressed support for removing the floor — a move estimated to generate about $60,000 more each year.
CVB receives almost all of its funding for tourism development from the tax, which will expire on June 30 unless it is taken up in a special session prior to that date. The LINK was set to receive $250,000 (roughly 10 percent of its yearly operating budget) if the tax had been renewed, and the city would have gotten $400,000 each year for various projects.
The tax generated almost $2 million in Fiscal Year 2017.
‘The floor’ debate
Smith and Chism supported a change in the House version of the bill that returned the $325,000 that went to conference committee. When the Senate conferees, including Columbus Sen. Chuck Younger, refused to sign the conference report that included the House amendment, the bill died on the last day of the session.
While Smith said his objection was based on the lack of referendum in support of the legislation, Chism’s objection is purely ideological.
Chism also voted against new tax legislation for Richland, Grenada, Vaiden and also Southaven, which had its restaurant tax renewed after its previous restaurant tax went into sunset in 2017.
“I was on the school board for 19 years and when I first ran, I told people I wouldn’t raise their millage,” Chism said. “When I ran for the House 19 years ago, I told people I wouldn’t vote to raise their taxes. I won’t do it.”
In December, Chism seemed to have softened on that position, saying he would support the county’s “new” tax that removed the $325,000 threshold.
Much of that centered on a promise the tax would help fund the second phase of construction at the Sen. Terry Brown Amphitheater on The Island, work that has been estimated at more than $1 million. With a four-year renewal of the tax, which is what legislators had aimed for, only a fraction of what was needed was slated for the amphitheater.
“During all the back and forth, I was asked if I would vote for the bill without a threshold if it would mean the amphitheater could be completed,” Chism said. “But when I saw the inter-local agreement between the city and the CVB, it had just $50,000 a year for the amphitheater. That wasn’t enough to finish it (in four years).”
In light of that, Chism said, he regrets saying he would consider a restaurant tax without the original $325,000 floor.
“I should not have considered it and certainly should have not said it, but I did,” he said.
Any attempt to revive the Lowndes County restaurant tax would not have his support, Chism said.
“If I’m going to be consistent, I would have to vote against it,” Chism said.
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected].
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