The Greeneville Town Council approved the town’s proposed 2025–2026 budget on first reading Tuesday — but the vote came with a significant caveat: a potential violation of state law regarding the use of hotel/motel tax revenues.
Finance Director Lora Young told council members that during a conversation with the Tennessee Comptroller’s Office on Monday, she was informed that Greeneville may have misallocated hotel/motel tax funds over recent years.
By law, those revenues—which come from taxes on overnight stays in local hotels and motels—must be used exclusively for promoting tourism and tourism-related development.
State statute also prohibits local governments from using those revenues to fund programs that were already in place before the tax was adopted. Young said it appears Greeneville has done exactly that. She cited support for the Dickson-Williams Mansion and some activities by the Parks & Recreation Department as examples of potentially noncompliant spending.
Despite the issue, Young recommended proceeding with the first reading of the budget to keep the town on schedule. She asked for two weeks to review each program currently funded by the tax to determine whether it complies with state law. Any necessary adjustments would be made before the budget’s final adoption.
Young did not say whether the town might be required to reimburse or otherwise remedy improper expenditures from previous years.
One of the most notable changes in the proposed budget was a cut in funding to the Greene County Partnership. City Administrator Todd Smith proposed reallocating those funds to create a new town position focused on economic development. The version of the budget approved Tuesday kept the Partnership’s hotel/motel tax funding at its current level.
That funding level is now under review as part of the broader compliance check. Whether the council ultimately adopts the proposed cut or chooses to maintain current funding levels remains to be seen. Mayor Cal Doty said that, in his personal opinion, he hoped the allocation for the Partnership would remain unchanged.
A second and final reading of the budget could come at the council’s next meeting, following Young’s review and any necessary revisions.
