Aiken City Council will hold the final vote Monday on whether to approve a 1 percent hospitality tax.
The 7 p.m. meeting is open to the public and will be held in the Municipal Building's Council Chambers, 214 Park Ave.
After months of discussing how the City could either raise revenue or cut expenditures, Council member Philip Merry proposed in March adopting a hospitality tax, a tax that the City once had but removed.
A hospitality tax, usually set at 1 or 2 percent, is a tax on the gross proceeds from the sale of prepared meals, food and beverages, which includes meals prepared in grocery stores.
If passed, the City of Aiken would follow other nearby cities who have done the same, which includes the 1 percent tax in the City of North Augusta and a 2 percent tax in the City of Columbia. A hospitality tax has the potential to bring in millions of dollars into cities, and according to the S.C. Municipal Association fiscal year 2010-11 report, cities received $92.3 million from hospitality taxes, and in fiscal year 2012-13, cities received $105.4 million.
Staff estimate that more than 60 percent of this tax will be paid for by people who live outside City limits, bringing in at least $1.2 million per year into the City. According to the U.S. Census Bureau 2014 population estimate, about 30,000 people live inside City limits; about 51,000 people live within five miles of City limits and about 90,000 people live within a 10-mile radius of the City.
The use of the collected funds would be split into four categories - $600,000 for business-related investment, which includes a 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 generated revenue would not be lumped into the general fund, officials said, but instead placed into their own "economic investment" budget. The first three categories would be approved as the tax revenue comes in, but the final category - enterprise capital reserves - would require Council approval before the funds are allocated or spent. Any funds left over at the end of each budget fiscal year would be placed in the reserve account.
Council already voted on this tax last month in a 6 to 1 vote. City Council member Dick Dewar voted against the tax, stating he was unsure whether this tax would actually "help business." But City officials have promised to use the funds brought in by the new hospitality tax to generate enough revenue to spur and help new and existing businesses, promote tourism and provide funding for needed infrastructure throughout the City.
In other business, Council will vote on the first of two votes whether to approve a new budget for the fiscal year 2015-16. Although the state's economy is improving, the agenda states, the "City of Aiken is still experiencing zero growth and our economy is growing at a rate much slower than the state."
City officials are projecting that within the next fiscal year the City will continue to fall short of revenue that they received several years ago due to a decline in building permits, state funding and Aiken County shared funds.
Within the next fiscal year's budget, officials have cut about five employee positions from the budget, included funds previously cut for software upgrades and included body cameras for all Public Safety officers to name a few.
Council will also vote on the first of two votes whether to approve keeping the millage rate, or property tax, at 62 mills for the fiscal year 2015-16.
Maayan Schechter is the local government reporter with Aiken Standard.