The Chattanooga Tourism Co. will not receive an additional $1.7 million from Hamilton County next fiscal year, an outcome the organization has argued could hinder its ability to draw major events to the region.
But county leaders said Wednesday they are committed to retaining large attractions like Ironman and working with Chattanooga leaders to settle on a more equitable share of lodging tax revenue from the city.
“My goal is, how do we get the tourism industry more money in the future?” Commissioner Jeff Eversole, R-Ooltewah, said during the board’s meeting. “How do we get the incorporated areas … to participate more?”
In a 10-0 vote, the panel approved the county’s $995 million budget for the fiscal year, which will start July 1. Commissioner Steve Highlander, R-Ooltewah, was absent.
The budget holds county funding for the Chattanooga Tourism Co. at nearly $10.4 million — the same as its allocation in 2022. County funds make up the vast majority of the Chattanooga Tourism Co.’s budget.
County Mayor Weston Wamp has said he wants to use approximately $1.7 million in additional hotel tax revenue the tourism agency was anticipating to enhance recreational opportunities in the county instead.
The city of Chattanooga also levies a tax on stays at local hotel rooms, but as part of an agreement with the county, its funding has historically gone to paying the debt on the 21st Century Waterfront plan, which revitalized approximately 120 acres along the downtown stretch of the Tennessee River, and not the tourism company.
Chattanooga Mayor Tim Kelly said Tuesday he’s open to rethinking how the city and county partner on tourism spending, but Wamp’s proposal came too late in the budget process for the city to change its plans.
Chattanooga expects to bring in nearly $9 million in its hotel-motel fund next fiscal year, a 13% decrease compared to the prior year. The city will spend $4 million next year on debt service for the 21st Century Waterfront project, which the city expects to pay off in February 2031, city spokesperson Kevin Roig said via text message.
Another $4.5 million is going toward the revitalization of the Walnut Street Bridge, Roig said, an $18 million project involving a major tourism asset the city is also paying for with $13.5 million worth of federal funding.
On Wednesday, the County Commission shot down a proposal by Commissioner David Sharpe, D-Red Bank, that would have provided the Chattanooga Tourism Co. with the entirety of the county revenue realized next year through the hotel-motel tax, which totals approximately $12 million.
The vote was 8-2 with Sharpe and Vice Chair Joe Graham, R-Lookout Valley, voting in favor of making the organization whole.
Sharpe said the county’s decision contradicts a resolution the commission passed in 2007 that commits all the revenue from the county’s hotel-motel tax to the Chattanooga Tourism Co. The board plans to amend that at an upcoming meeting.
Sharpe said he was open to exploring how officials can use the hotel-motel tax in new, creative ways moving forward, but at this point, he didn’t believe it was appropriate for the county to take that out from under the Chattanooga Tourism Co. He said the issue is about people in the local tourism industry who rely on the agency’s ability to market to help improve their ability to earn.
Two days after presenting his budget on June 7, Wamp said he and Chattanooga Mayor Tim Kelly spoke to the president of the Chattanooga Tourism Co., Barry White, to express their desire to work in partnership moving forward.
“But, this is what I’ll tell this body — and I have shared it with most of you one-on-one — if you want a partnership with the city, what you have to do is change the status quo,” Wamp said to commissioners Wednesday. “The status quo is the county foots the whole bill, and the city doesn’t.”
Wamp said county officials are open to funding opportunities in the next year for major events like Ironman.
“Everybody’s always been saying we want a partnership, and it’s teed up, but the county has to draw a line, otherwise, we’ll never have a partnership,” Wamp said.
White agrees with the need for more equitable investment from the city in the tourism agency — it’s something officials have been working toward for a while — but he has issues with the two-week notice the organization received from the mayor’s office about the funding decision. Tourism is a massive industry in Hamilton County that requires continuous investment to maintain, he said.
“Hamilton County residents saved more than $800 on their tax bill … because of visitor spending,” White told commissioners. “The return on the investment with the organization is 4 to 1, so for every dollar that comes in we would deliver four at the end of the day.”
White also corrected one of the assertions the Chattanooga Tourism Co. made in a series of recent messages to partners. The agency had claimed the funding freeze could jeopardize approximately $2.7 million worth of federal pandemic dollars the organization expects to receive from the Tennessee Department of Tourist Development.
That money is not at risk, he said, but the organization will be spending that money upfront before receiving reimbursement, which means there needs to be funding available in the agency’s budget.
Graham urged county officials to establish a timeline for adopting a funding agreement with the city.
“Whether the other, smaller municipalities participate or not, my goal would be that the city of Chattanooga and Hamilton County would now be equal partners — that we would retain 50% of our hotel-motel tax,” he said.
Contact David Floyd at dfloyd@timesfreepress.com or 423-757-6249.