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Occupation tax may be dead issue
May 18, 2012 Jerry Purvis   

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After almost an hour of heated discussion and strong opposition from Gering’s lodging operators, the city council voted not to revisit a proposed 4.5 percent occupation tax on hotel rates.

On April 9, council members unanimously approved a 4.5 percent occupation tax on hotel and motel lodging in the city. The tax would generate approximately $49,000 annually. The tax would go into effect on June 1 and would be used for the city’s recreational and entertainment facilities, such as Five Rocks Amphitheater.

The tax would also be used for a multi-year project to build a $12 million sport complex just north of the amphitheater.

But at its next meeting on April 23, council heard objections to the tax from the city’s lodging operators. Steve Schliening from Monument Inn and Suites said most of their business is primarily done on a contract basis and agreed-to prices can’t be modified. Consequently, the operator would pay the brunt of the tax.

Council members then voted to suspend the tax ordinance they passed two weeks prior, until more research and discussion could be completed. Also, council wanted to know if Scottsbluff and Terrytown would pass similar ordinances.

Gering Mayor Ed Mayo made a pitch for support of the ordinance to the Scottsbluff council, which rejected the idea.

Gering council member Joyce Hillman-Kortum had earlier asked whether Gering was willing to “go it alone” if Scottsbluff didn’t implement a similar tax.

Council member Jill McFarland introduced an agenda item for Monday’s meeting to consider reinstating the occupation tax for Gering.

Again, there was strong opposition from the city’s two motel operators. They said a tax that applies only to Gering would put them at a competitive disadvantage with Scottsbluff motels. The 4.5 percent occupation tax would add $3.60 to an $80 motel bill.

But Heather Ormond, operator of Circle S Lodge, said most of her customers are with Union Pacific. Because they’re on a per diem expense account, any hike in room rates would cause them to “walk out the door and go to Scottsbluff.”

Steve Schliening from Monument Inn and Suites agreed, saying their opposition is even stronger, given that Scottsbluff has no interest in passing the occupation tax.

While the occupation tax would be used for existing recreation venues, many people still equate the tax with building a sports complex.

“We feel it would be a risky gamble for the Gering City Council to go forward with this project,” said Rod Smith, co-owner of Monument Inn and Suites. “The initial $12.4 million for a sports complex and the $300,000-plus annual cost of operation could become a huge tax burden.”

Gering resident and business owner Kirk Arnold spoke in favor of the city building a sports complex, saying it was an opportunity for the future.

“What you can do is set the foundation of what the city’s future will be like,” Arnold said. “The seed for a recreation complex has already been planted. We don’t know where it’s going to come up, whether here or across the river. But if we don’t build it, someone else will.”

Council member Larry Gibbs said even if the occupation tax were reinstated, it wouldn’t raise enough money to do any good because Scottsbluff and Terrytown won’t participate.

“Yes, we did expand the definition of what we can do with this tax revenue,” Gibbs said, “but the main purpose is still to build a sports complex. It’s not going to happen in the near future.”

With council member Don Christensen absent, members voted 4-3 to not to reinstate the occupation tax. Voting to keep the suspension in place were Gibbs, Dan Smith, Julie Morrison and Manuel Escamilla. Voting to reinstate the measure were McFarland, Hillman-Kortum and Rebecca Shields.

After the meeting, Mayor Mayo said more than 20 other Nebraska communities have implemented an occupation tax over strong objection. The feared loss of business never happened, and their motels are doing well. But when asked the way forward, he could only shrug.

Gibbs said the occupation tax proposal should go on the agenda for a fourth straight meeting on May 29. At that time, the council should consider eliminating the ordinance altogether, given that Scottsbluff isn’t interested in participating.

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