East Ridge residents now will have to add 30 cents to their property tax rate and $5 to their garbage fee. But hotel and motel owners will be spared an additional tax because of a directive in Tennessee Code overlooked by the council until several days ago.
The $10.94 million budget passed 3-2 at the East Ridge City Council meeting Thursday night, with Mayor Brent Lambert, Vice Mayor Larry Sewell and Councilman Darwin Branam voting for the tax and Councilmen Denny Manning and Jim Bethune voting against.
The legality issue on the hotel-motel tax, which would have supplied the city an additional $130,000 in revenue, was brought before Lambert by Bill Breneman, director of sales at New Century Investments, which owns five hotels in the area.
"I knew their decision to raise taxes would hurt our ability to be competitive, so I was doing research about it," Breneman said. "Then I saw that code didn't even permit them to raise this tax."
State code states: "The tax is levied by ordinance with approval by a two-thirds vote of the legislative body," or by a municipal referendum.
The East Ridge City Council consistently has voted 3-2 on its decision to raise any kind of taxes this year, which could invalidate the measure if voted in.
On Wednesday evening, Lambert, Sewell and City Manager Tim Gobble met with City Attorney John Anderson at his office to discuss the legal implications of the tax.
Lambert insisted that the meeting was not a Sunshine Law violation, that it was just a legal briefing with the city attorney.
Tennessee's Sunshine Law states that any meeting is open when it consists of two or more members of a governing body empowered to deliberate toward a decision.
"Why didn't you just give the rest of us a call?" Bethune asked during Thursday's agenda session. "Why didn't you just announce it and make it open?"
"It wasn't a meeting. I was just answering the mayor's question," Anderson said later. He said Sewell asked to be included because he wanted to know what was going on. Bethune and Manning said they were never notified of the discussion beforehand.
Frank Gibson with the Tennessee Coalition for Open Government said that though the Sunshine Law may not have been violated, the spirit of it was.
"There is a Supreme Court decision that allows members of public bodies to meet with their attorney to discuss legal controversy," he said. "But two council members discussing city business is questionable. The other council members were elected to represent people in East Ridge, too, so I think they would be entitled to be at that meeting."
Though Gobble said there was no formal deliberation during the meeting, the parties left with the impression that the hotel-motel tax would be nixed.
"I left the meeting feeling like based on the city attorney's recommendations that there would be someone to make a motion to amend the budget," Gobble said in an interview before Thursday agenda session.
Bethune said he had a hard time believing there was no deliberation involved in the hourlong discussion with the attorney.
Lambert took offense to Bethune's insinuation, turning the discussion from taxes and the Sunshine Law to accusations and infighting over the past six months.
"I don't care if you like me. I don't care if you don't like my politics, but when you start accusing me of corruption I take great offense," Lambert said heatedly to Bethune and Manning.
"I've never called you corrupt. I've asked you questions; you've asked me questions," Manning replied.
The council meeting itself was less heated, though several residents spoke out against the council's failure to cut more spending.
Not a single cut was made to the budget since it was first introduced, and a 3 percent pay raise for city employees remained untouched.
"Why can't y'all cut back?" asked resident Michael Hughes. "I understand that y'all have to think about your employees, but there's 20 percent of us that are out of work in this town."
Gobble maintained that the budget was as stripped-down as it could get, and that it was necessary for the city to close its deficit and start replenishing its reserves.