FAIRVIEW HEIGHTS -- The Chamber of Commerce sent a letter to the City Council on Tuesday asking it to reconsider a proposal to raise the city's hotel-motel tax from 5 percent to 8 percent.
Fairview Heights Chamber Director Scott Leas read the letter before the Council at its meeting Tuesday night. In the letter, Leas said the move "could potentially devastate an already struggling industry in our community."
"We're not surprised that the Council at this point is still entertaining raising the hotel-motel tax, but the Chamber is ready to provide any assistance possible to educate the Council on the potential for negative activity on the business community," Leas said.
Ward I Alderman Gil Klein motioned to have the legislation returned to the finance committee for review and further research. Klein said the issue will be brought back to the finance committee for further discussion.
"I'm not opposed or unopposed," he said. "I just want to make sure if we do anything, we know exactly what we're doing and what it is being done for."
The ordinance was proposed by Ward 2 Alderwoman Pat Baeske, who has said it would generate revenue from visitors to the city rather than residents.
Baeske could not be reached for comment Wednesday.
The Chamber has led the opposition. Leas said there are two pieces to the legislation: one would increase the tax, the other would give city leaders the power funnel the revenue into the city's general fund and eliminate the city's hotel/motel review process.
State law intends municipalities to use hotel-motel tax revenue to promote tourism, but the city's home-rule status enables it to earmark the money for another purpose.
"I'm totally opposed to that," Klein said.
Leas compared it to taking the city's motor fuel tax revenue and dumping it into the general fund rather than spending it to repair and maintain roads, which is the tax's purpose.
"It's not smart business," he said. "You lose more money by dumping that into the general fund and driving business away because if you drive visitors away, not only are you losing hotel-motel tax money, you're also losing tax money you would get there from shoppers in retail tax, gas tax and food and beverage tax."
Ward 2 Alderman Speed Allen Jr. said that he is against any tax increase at this time.
"I think it's the wrong time to be increasing any taxes," Allen said. "I think surrounding communities would have an advantage. I don't think we need to be put ourselves at a disadvantage."
Mayor Gail Mitchell said one business owner told him that the proposed tax increase would cost his business an additional $1,000 a month and that he would the consider moving the business to O'Fallon.
"I'm not in favor of it," Mitchell said. "If we pass it, our tax is going to be higher than any of the other communities."
By comparison, both O'Fallon and Belleville charge a 5 percent hotel-motel tax rate.
"We have to generate some money," Ward 5 Alderwoman Bonnie Crossley said. "But let's keep our lines of communication open so we can work with industries who bring this revenue in, like hotels and motels, retail stores and restaurants and so forth."
Ward 5 Alderwoman Sandy Baldwin said she is undecided and that the issue needs to be discussed further in order to find ways to generate revenue.
"There is going to be a shortfall, and we will need to find ways to bring in income into city," Baldwin said. "But we certainly don't want to impede anyone's business."
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