Knoxville Mayor may not renew contract with KTSC

9:06 PM, Jan 26, 2012   |    comments
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Knoxville Mayor Madeline Rogero tells 10News the city should look more closely at how it spends its tourism dollars, and whether that spending should include the Knoxville Tourism and Sports Corporation (KTSC).

The city is in the midst of looking at the numbers and deciding if it will renew its contract with KTSC.

The contract between the city and KTSC expires on June 30, 2012.  There is an option to extend for an additional year.  Mayor Rogero said she is carefully reviewing that contract, along with all city contracts, and has not made a decision about renewing it. The City Council has to approve, either way. 

Rogero said she wants to take the next few months, as the city enters its budget process, to open up a larger discussion about tourism in Knoxville.

"I know KTSC has had plenty of accomplishments, but at the same time, let's take a look at what they're doing, how they're doing it, and who else might be able to provide services as well. I just think it's time to have a thorough review of that," said Mayor Rogero.

Controversy has surrounded KTSC since 10News first reported earlier this month that the organization spent 60 percent of it's $3,000,000 budget on employee salaries. Another number that stands out on IRS documents is pay for CEO Gloria Ray. She collects a $400,000 paycheck, including a $171,000 bonus.

Rogero tells 10News she told Ray in a recent meeting that Ray's pay was "excessive."

KTSC has maintained that it is not funded by any local county tax dollars, that a majority of its budget comes from the Knox County hotel-motel tax. While that is true, part of its revenue also comes from City of Knoxville taxpayers.

Here's how the numbers break down according to contracts KTSC has with Knox County and the City of Knoxville:

-Knox County collects a five percent tax on every hotel bill; that goes into the county's hotel-motel tax fund

-KTSC gets 45 percent of that fund

-The county gives 10 percent of that fund to the city

-The city then turns around and gives that 10 percent to KTSC, so really KTSC gets 55 percent of the county's hotel-motel tax

In the 2011 fiscal year, according to city and county finance departments, that amount totaled nearly $2,800,000.

-Another 40 percent of the county's fund goes to paying off debt

-The remaining five percent goes to grants for community organizations. 

The City of Knoxville puts its own three percent tax on hotel rooms within the city limits. All of that money goes to pay off debt on the Knoxville Convention Center.

The city still gives KTSC around $1,000,000 each year. About half of that comes from the city's cut of the county's hotel-motel tax, mentioned earlier. The other $500,000 comes from the city's general fund, according to City of Knoxville Finance Director Jim York.

All of this means KTSC is getting a big chunk of money from taxes. KTSC has been getting its share of that money since 2002, when it got the contracts to handle the tourism promotion and marketing work that used to be done by a public agency.

Knox County renewed their contract with KTSC in 2011.  It runs through June, 2016.

10News asked KTSC for a comment about part of their funds from the City of Knoxville coming from local tax dollars. KTSC spokesperson, Kim Davis, released the following statement to 10News after the original story aired on 10 News at 6pm:

"The funding the Knoxville Tourism and Sports Corporation receives from the City of Knoxville is calculated and determined by the amount of hotel/hotel tax collection from both the City and County hotel/motel taxes. The City of Knoxville has investments in facilities, such as the Knoxville Convention Center, Chilhowee Park, the Civic Coliseum & Auditorium, World's Fair Park, etc., that they are interested in promoting and marketing to meeting planners. The KTSC works with the decision makers to sell Knoxville's facilities as potential venues to host their event or meeting. Additionally, we work with the COK to market City events such as Christmas in the City, July 4th, Boomsday, as well as promoting the Uniquely Knoxville brand that features authentic Knoxville experiences."


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