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For Ex-Third Class Cities, Seeing Sustained Progress In Tourism Is Like Getting Blood From A Stone.

I remember standing in the middle of Cumberland Avenue on Sunday, October 2nd…covered in sweat and barely able to keep my eyes open…and looking at my phone to check the time.

4:06…. A.M.

I snapped a quick picture so I could remember that moment. It was the exact moment where my complaints about the financial handcuffs placed on tourism commissions of ex-third class cities in Kentucky went from being one of irritation to completely pissed off.

I sat there and looked at 10 or so of my closest friends, even one who would go on to win our city’s mayor race in the coming month, absolutely exhausted, but still upbeat, smiling and trying to keep the mood light. They’d volunteered to help all weekend at our annual Cumberland Mountain Fall Festival in Middlesboro and were helping me take the stage down in the street. We had just had a successful show that featured a ton of great artists and had brought a lot of folks from outside of town. Combined with the crowd that came for Hinder down at the Levitt Stage, it was one of the best turnouts we’ve ever had for that event. But after the last band left, we waited on the sound guys to get their equipment, and finally at midnight or 1 AM we were able to start tearing down the stage. I wanted to do it in-house this time, because had invested so much of our funds not just to help this event, but numerous events year-round in Bell County. Event-based tourism has been a model of success for us unlike anything we’d done before, and now lots of rural communities in the region are adopting a similar approach, which is awesome to see. But in our case, we don’t have the money that our neighbors do. With the stage, I didn’t want to spend any more money than necessary because I knew funds were getting tight. So instead of paying for some help, I decided to take down the stage with just me and my friends. If you’ve never done it before…tearing a stage down is hard work with a ton of heavy lifting…and none of us are getting any younger. We succeeded in getting it down and the streets cleaned before Sunday church services, but it took a LONG time, and it exhausted us to the point where we all slept for 2 days straight.

I felt awful about it, and still do honestly. It happened because of a choice I made as tourism director that I now still have a twinge of regret over. I choose to attempt to build our tourism industry and the financial insecurity that came along with it instead of the alternative, which was never realizing what our maximum potential could be (but not having to worry about our financial wellbeing). My curiosity wanted to see just what we could accomplish with the limited funds we have. What if we dedicated the money to try, and coupled it with as much blood, sweat, tears and volunteers as we could muster. It’s worked in regard to the fact we’ve seen record month after record month lately, and five consecutive years of growth (minus the COVID year of 2020). But, in my opinion, we’ve hit our maximum potential. If we try to do anything more, we’ll be broke. From here, all we can do is hope to maintain our current numbers. And honestly, probably need to scale it back a little. That’s something that really, really irks me. I’ve always been one to try and squeeze as much blood from this stone as possible, but unless we are able to change our restaurant tax situation, the fact of the matter is we’re going to have to scale back our efforts. And that sucks.

I never care to be the one first one there and the last to leave at our events and concerts…to try and go the extra mile to try and make something happen as cost effectively as we can. The things that most tourism commissions outsource…building their websites, constructing marketing campaigns based on countless research hours, filming and editing videos, running venues, and a million other things….we do 95% of that stuff in house. Because, well…we have to. But even that is not the point of my issue. Putting my own blood, sweat, and tears into this job is something I take a lot of pride in, because I’m very lucky to have this job, and not a day goes by I don’t realize that fact. But seeing what I put my friends through (and continue to put them thorugh) to try and achieve a new level of success here….it really tears me up. I know, still at the time of writing this, that they would do it a thousand times over, because of the love they have….for live music, for their community, and for me. And I wish I could promise them that the back breaking night/morning of the Fall Festival would be the last time. But it probably won’t.

That alone is what has tipped the scales on just how exhausted I am in trying to fight for something that should be common sense (at least to me). All we are asking for is to have a level playing field with other cities like us by giving us the choice to utilize a restaurant tax. It’s something that so many rural Kentucky towns around us have, and Middlesboro is one of a handful of cities in our state that is caught between a rock and a hard place. When folks ask, “Why can’t Middlesboro do XYZ project?”….the answer is almost always, because we don’t have a restaurant tax. It’s something that 99% of people don’t even realize they’re paying in other towns when they go out to eat, because it’s only usually 3% of your bill. But that 3% of your dining bill is something that is a complete game changer for its community.

I’ve harped on the unfairness of not being able to choose to have restaurant tax until I’m blue in the face. I’ve written plenty about it before, but to summarize: Middlesboro and around 17 other cities like it, who’s populations are between 8,000 and 19,999, were once classified as third-class cities and therefore not eligible to have a restaurant tax under Kentucky law KRS 90A.400 (ex-second- and first-class cities are also not permitted to have one, but for our case I am focusing on the ex-third-class ones). The problem is, several year ago, Kentucky did away with city classes and instated home rule. Before that, cities could change their classification. The Kentucky League of Cities made a list of cities that were eligible to have a restaurant tax, shown below. Some of those cities now have more than 8,000 people, but since we are now in home rule, they are seemingly grandfathered in and we are grandfathered out, with the latest census not having any effect on changing their now-defunct city classification. It’s put third class cities that want to see their tourism and downtowns develop at a critical disadvantage. Regarding the decision of what cities could enact a restaurant tax, I can only imagine that the logic was that, since these cities are smaller, they likely aren’t able to attract hotels to fund their tourism commissions, so instead they decided that they could utilize a restaurant tax. What they failed to account for is that a restaurant tax generates many times over what a hotel tax could. It’s why cities that are much smaller than ours, that produce a fraction of the economic impact through tourism, have budgets 5 or even 10 times ours. Its honestly….well, ridiculous.

Some of these cities haven’t enacted a restaurant tax even though they are eligible, and that is fine. They could be funded in other ways, presumably. But they at least have the choice on whether or not they want it, and that is my point. We are being deprived even the option to choose. I know that a new tax is something that will make most everyone groan, but research has shown that this tax will be contribute to by and large by folks from outside the city of Middlesboro (76%), but the city will be the sole beneficiary of the tax. It’s also proven that as tourism increases, it decreases taxes in other areas due to their spending in our local economy. The state likes to send out this information in fact sheets to tourism commissions every year (see below example from 2017 Economic Impact Sheet).

This showcases how this particular tax not only grows the community but will end up saving our citizens money on the aggregate at the same time.

Our hotels are consistently at capacity, and we desperately need more rooms. I am hopeful we can add a lot of new Air BNBs, but that’s still a long way from what we need. More hotels would help our financial situation (as we are funded by the hotel tax), but COVID taught an invaluable lesson…sometimes, folks don’t travel. That caused a massive financial fallout to all tourism commissions, but us more than any, because while the hotel stays bottomed out, restaurants were able to still adapt and survive (and some doing even more business than before, shockingly).

That’s why I can’t stop until this ridiculous law changed. I’ve been told by some it can be done, by others that it can’t. But for something that is negatively impacting so many cities in Kentucky, for no justifiable reason, it should be changed and done so immediately. People wonder why certain towns look to be thriving and others not…I can tell you; this is almost assuredly the reason. With the ability to utilize a restaurant tax, a city/tourism commission can make substantial improvements that facilitate growth in their communities. One prime example is an incentive package for new and existing businesses in downtowns. Sure, Middlesboro does currently have one. But compared to the packages offered by other cities in our region, ours isn’t even in the same stratosphere. And that’s a major, major reason why we are behind the eight ball in being able to attract new businesses.

I’ve reached the point of exhaustion of trying to get this law changed. It was something my predecessor, Judy Barton, tried to do during her entire 20 year plus tenure. She was intelligent and respected throughout the tourism community, and it was something she couldn’t accomplish. And thusfar, I’ve not been able to move the needle on it either. As I sit and try to read the tea leaves of the future of tourism here, it’s evident that unless this changes, we will have to scale back our attempts at progress. We found a recipe for success here by capitalizing on our strengths: our outdoors, frontier history and recently our development of live music venues and events. These efforts will have to be scaled back in the coming months and years, because I can’t wipe our bank account out to keep trying to get another record month for us.

The thing I think that is making it even more difficult to get it changed is one that happens a lot in life: when it’s not your problem, its way easier to ignore. What I need folks to understand, especially everyone who lives in an ex-third-class city, is that it is your problem if you care about you community. But it has to extend even farther than that. I have no doubt that Ill have a lot of my peers, who I love and respect, will comment and say “Keep trying, we’re with you!”. And I appreciate the sentiment, I truly do. But I need them to REALLY be with me. Just like they undoubtedly have issues they’re facing that I would fight alongside them for…I need them to treat this issue like it’s theirs. We need organizations that represent us, like State Tourism, the KTIA and the KACVB, to understand just how important this is to us, and to fight for us. We need the Kentucky League of Cities to work with these organizations to find a solution (one I think is not that complicated, see next paragraph). And yes, we need average citizens to make their voices known, too. I know advocating for a new tax sounds silly. But this is something that will lower your taxes in other areas, while being contributed to mostly by folks not from here. Even now, when all 18 of the cities affected by this are speaking up together, we’re still a relatively small number. We need help from everyone. Without all these things taking place, it’s easy for the state legislature to ignore. Without all these things happening in conjunction with each other, it doesn’t stand a chance.

I’m not one to identify a problem and then not offer what I think is a reasonable resolution. The solution I think would be pretty simple. I’m a firm believer in transparency, so at the risk of getting yelled at by some folks, I’ll say what I know. The Kentucky League of Cities has advocated for all cities to be able to have a restaurant tax, with 75% going to the city and 25% going to tourism commissions. On the surface, I’m fine with that. Middlesboro should generate between $1.5-2 million dollars annually from the tax, if it chose to enact it. While it’d be nice to have 10 times my current budget, I don’t need that. I’m not advocating for anything outrageous. One thing I would not be in support of is having the 75/25% happen to all tourism commissions in the state. I would hope that tourism commissions that are currently enjoying the benefits of having all their restaurant tax go into their budgets could continue that. I don’t think asking them to give up 75% of their budgets is fair, even if it would mean us benefitting from that decision.

The solution is pretty simple, to me. Grandfather in the tourism commissions that are currently getting their restaurant tax money to keep it the way it is. The new cities that don’t currently have it, like us, would mostly likely gladly accept 25%. I know I would. I would also advocate that of the 75% of the money that is going to the cities, that half of it be used for strictly tourism and downtown development purposes (currently it is state law that all restaurant tax and transient tax money be used for tourism purposes). The other half, let them use it for whatever is needed. That way there is a middle ground for those who want to see it used strictly for tourism and those who want it to be used for anything.

This has been by far the most frustrating endeavor of this job so far. When I came from the Fiscal Court in 2007, I looked at our budget with wide eyes. I was so happy to actually have a budget! It took a few years of research before I realized just how behind we were compared to our neighbors. And now that we’ve reached our potential (in my eyes)…unless this is changed…this is as far as the road goes for tourism here. Even if we were to get several new hotels overnight, it wouldn’t change it nearly as much as changing this law. Even with projects like Boone’s Ridge and the potential it has, if our tourism commission has no way to help facilitate their growth, then what kind of partner are we?

We have to get KRS 91.A amended if we want our city to be able to take another step in the right direction. I am not one to give up, despite the odds. I want progress for my city too much to throw in the towel on it. I hope that one day, if we can get enough support, we can get the folks in the KLC and Frankfort to help us get this major problem fixed. It’d be great if that could be the upcoming legislative session. I’ve made countless phone calls and emails. I’m to the point where the next step for me is probably getting a bullhorn on the Capitol steps and looking like a lunatic. Nothing else has worked so far, despite rumblings of progress on the issue.

Middlesboro and the other ex-third class cities deserve the opportunity to choose our own future, just like the other cities on the list above. I don’t want to have to risk bankrupting our tourism commission in order to see progress, and I damn sure don’t want to consistently work my friends and the people I love to the bone because we have no other option.

I’m not a political person, but Hal Rogers has a great quote: “A dream without funding is an illusion”.

I’m tired of being one of the ‘have-nots’. And yes, that is what folks in some state organizations call us ex-third-classers. Not that I mind the term, because it’s true. But if they call us that, they seemingly understand our plight, but are unwilling or unable (or maybe a combination of the two) to stand with us. I need them to.

I need the folks reading this to care about this half as much as I do. I know that is a lot to ask. Without your help, this doesn’t stand a chance. Look at towns like Corbin, London, Pineville…towns that have used their restaurant tax to transform their city for the better. Look at the amazing strides they’ve made in the last few years.

We deserve the chance to do that as well.

Click HERE to download attached letter you can send to your local senator and state representative to encourage them to take up this cause. You can also support us in the meantime just by coming to visit Bell County…catching a show at the Bell Theater, visiting Cumberland Gap or Pine Mountain, and just staying overnight a few days. The love that folks have shown us the last several years has been heart-warming, and I don’t want to come off as ungrateful for any of it. That’s not the case, in fact it’s the opposite. I just want the ability to do more, to build more, to see what this community can truly be if the cards aren’t stacked against us.

Any help in the fight to do this is greatly appreciated. Thank you all for taking the time and for supporting our efforts. It means the world.


Jon Grace / Bell County Tourism Director

E: / P: 606-248-2482

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