Pigeon Forge Motel

Greg Johnson: Tourist town hikes taxes

Pigeon Forge, by a 3-2 vote Monday night, took a big step toward balancing its fiscal 2011-2012 budget - at considerable cost.

Mayor David Wear and Commissioners Kevin McClure and Joyce Brackins voted to raise the hotel/motel tax in the tourist town from 2.25 percent to 2.5 percent and lift the tax take on revenue from amusements - think Dollywood - from 2 percent to 2.5 percent. Commissioners Randal Robinson and Howard Reagan voted against the tax increases.

On July 11, city commission, after a public hearing, will decide whether to raise Pigeon Forge's property tax rate from 12 cents per $100 of assessed value to 20 cents. Commissioners also approved a 20 percent hike in water and sewer rates, making 2011-2012 the most taxing time in 40 years.

Assistant City Manager Eric Brackins said the city had to decide whether to cut services or raise revenues. Brackins said the city has made no significant capital expenditures for the past two years and pointed to the city's long history of maintaining low tax rates.

"We have revenue sources most other cities don't," Brackins said. After the 1982 World's Fair in Knoxville, Pigeon Forge saw overall business revenue grow "10 to 20 percent" each year from the mid-1980s to the mid-1990s, according to Brackins.

Pigeon Forge is seeing incremental increases in revenue in 2011. Through April, gross receipts were up 4 percent, though gains were spotty. Hotels showed a gain of 3 percent, while amusement income was down 4 percent year over year. "We're still not back to 2007 levels," Brackins said. With continued global economic uncertainty - consumer spending nationally showed zero growth in May - it could be years before Pigeon Forge revenues completely recover.

Brackins said the city has added services over the past several years without a tax increase, pointing to a community center and a full-time fire department. He also noted that city water rates, after the big bump starting July 1, will still be 7 percent below the 2009 average in the East Tennessee Development District. Wastewater disposal fees will be one-third less than the average, Brackins said.

But this budget may not end Pigeon Forge's fiscal challenges. The city has committed to build a $50 million events center and, based on the experience of Sevierville, its sister city and friendly (?) competitor, Pigeon Forge will likely have to feed its "investment" from its general fund.

Sevierville "invested" in a municipal golf course and an events center years ago. Through May, the events center was operating at a $77,000 deficit and Sevierville's golf course was $587,000 in the hole for the fiscal year. The performance of the events center is much improved and the golf course recently completed a major renovation aimed at attracting more golfers, but to balance its 2011-2012 budget, Sevierville moved almost $2 million from its rainy day fund.

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