Multiple Effingham businesses turned out for Tuesday’s city council meeting to voice concerns over a tax that’s been on the books since 2005, but not always enforced. The ordinance imposes a 5% tax on organizations who collect any kind of admission charge, be it for tickets, parking, or other costs to attend an event. Fundraisers and free events are exempt.
City Administrator Jim Arndt said the tax was tool for the city to build up its tourism fund, used to help promote Effingham, as well as provide financial support for groups putting on events. “I think 60% goes to the general fund and 40% goes to the tourism fund and then we’ll utilize those monies as tool, if you will, to be able to assist community members, community organizations and event planners to be able to have events in town,” Arndt said. Revenue from the tax would be a boon to the city’s overworked tourism fund, which has been spending at a deficit for the past few years.
City Administrator Jim Arndt discusses the amusement tax.
However, area entertainment businesses and organizers see the tax as more of deterrent than a tool. Mid America Motorworks event organizer Blake Yager called the city’s renewed interest in enforcing the tax an “attack on businesses trying to bring entertainment to Effingham.” His concern was that the tax would make Effingham less competitive when bidding for large acts, such as Luke Bryan. Yager said the tax could also negatively impact attendance their annual Corvette Funfest event.
“We’ve spent the money on the infrastructure, the property, to bring these acts and to have the acts want to come to us. They won’t want to do that if they have to pay a tax in these small towns,” Yager continued. Mid America Motorworks owner Mike Yager said that running events was already tough enough without the city getting involved by enforcing a tax. The city did award a $25,000 grant to Mid America Motorworks in September for outdoor events. The grant was taken from the tourism fund.
Blake Yager on the amusement tax.
Local music promoter Bill Passalacqua expressed worry over the scope of the tax and how it would impact the local music scene. He said the tax would “discourage artistic ventures at every level.” Effingham Performance Center Executive Director Rich Jorn said the additional tax could impact how customers buy tickets for shows at the non-profit venue.
Tuscan Hills Winery General Manager Eric Harke wondered what would business, not requesting city funds, would gain from paying onto the tax. Legacy Harley Davidson owner Paul Gutman wanted to know if he’d have a pay a tax on free events that don’t have any kind of admission charge.
City Commissioner Don Althoff brought up the point that city had to generate revenue to promote and support events somehow. “We have to offset it [tourism costs] some way,” Althoff said.
Arndt said that groups putting on events regularly would be required to get a licence from the city and would pay the 5% tax based on what they take in after the event. Organizations putting on fewer than ten events a year would pay the tax based on what they expect to bring in.