Aiken City Council member Dick Dewar raised his hand alone Monday night, voting against a proposed 1 percent hospitality tax.
Mayor Fred Cavanaugh, alongside the five other Council members, voiced their support for the tax on the first of two required approvals, as newly minted City Manager John C. Klimm looked on.
Although each Council member, including Dewar, cited the need to find extra revenue for the City - to fund infrastructure needs and tourism-related projects, Dewar said he wasn't sure how the tax would "help business."
Other council members answered, saying the tax would raise money needed to invest in projects that will bring new business, tourists and residents to the city, eventually growing the tax base.
A hospitality tax is a tax on the gross proceeds from the sale of prepared meals, food and beverages - that includes meals prepared in grocery stores. While state law allows cities to levy up to 2 percent, the Aiken proposal is for a 1 percent tax. If Council does adopt the hospitality tax with a second and final vote in May, the City of Aiken would join more than 100 other South Carolina municipalities who have already done so - including the City of North Augusta.
Monday's vote follows a handful of hours-long meetings between Council and staff over the last several months. Council member Philip Merry originally proposed the hospitality tax as a way to support both business and future growth while helping to close a revenue gap in the City budget.
For many on Council, the need for the tax became particularly evident after staff announced one of its largest public-private partnerships with local hotel owner Neel Shah. Shah is proposing to gut and revitalize Hotel Aiken on Richland Avenue, while the City is proposing to spend nearly $3 million on a public parking deck adjacent to the hotel. A hospitality tax, staff have stated, would support the construction of that parking garage.
"For decades, we've been talking about issues with parking downtown," interim City Manager LeDuc said. "I can recall about five years ago meeting with all of the merchants on Richland (Avenue) and Laurens (Street) about the parking problem."
Officials estimate that within one year the hospitality tax could bring in at least $1.2 million. That revenue, LeDuc said, would allow the general fund to remain untouched as most of the tourism-related projects would be funded from the 1 percent tax revenue.
The use of the collected funds would be split into four categories - $600,000 for business-related investment, which includes the public parking deck, $160,000 for business license relief, $110,000 for business vitality and $330,000 for enterprise capital reserves, which includes infrastructure expansion.
The business license relief would be extended to new businesses for the first three years of operation, under the proposal, as an incentive to locate within the City.
Although Council allowed the public to raise questions and express concerns, Council members themselves spent some time going back-and-forth about the tax law and whether this tax could curtail residents from eating out.
Council member Reggie Ebner, who supported the tax, said he was concerned that Council down the road may have to raise property taxes to support the City's budget.
City revenues have declined considerably since the impact of the recession hit in 2008, while expenses have remained nearly the same, Ebner pointed out.
"We need to do this," Ebner said, "but I don't want to be shortsighted and have to raise the millage rate."
Alluding to the split 4-3 vote Council took several years ago on Citizens Park, Council member Lessie Price again reminded the public that years ago three Council members opposed the park, primarily because the Savannah River Site had just laid off 10,000 people.
"And I'm thankful that there were four people that had the fortitude to realize what Aiken would be like if we had not passed that," Price said " ... The question is right now, do we want to wait until later, or do it now? It's not a popular decision. I don't take pride (in raising taxes), but Mr. Mayor, I think it is the right thing to do at this time."
Dewar repeatedly asked City staff why residents wouldn't be allowed to vote on a referendum, allowing their voices to be heard. City Attorney Gary Smith said per state law concerning a hospitality tax, it is solely the Council's call as elected representatives.
Council will hold a final vote on the hospitality tax on Monday, May 11.
Maayan Schechter is the local government reporter with Aiken Standard. An Atlanta native, she has a mass communications-journalism degree with the University of North Carolina Asheville. Follow her on Twitter @MaayanSchechter.