County Could be Model for Room Tax Reform
Door County appears to be a well-oiled machine when it comes to the room tax. In fact, it could be the very model for the room tax reform legislation introduced in September by Representative Garey Bies (R-Sister Bay) and Senator Luther Olsen (R-Ripon).
The legislation was discussed in detail at a meeting of the Door County Tourism Zone Commission Executive Committee, held on Oct. 17 in Egg Harbor.
“At our last board meeting, we voted unanimously to support room tax reform legislation,” Jack Moneypenny, president/CEO of the Door County Visitor Bureau, told the group. “We think it is the right thing to do. It will not affect anything in Door County, with the exception of three percent going back to lodging owners to help cover their credit card costs for the tax on the room. They are the only ones that are charged with collecting that tax at their own expense, so we feel it is right that they be given a little relief. For every $100 room they rent, it’s about 16 ½ cents of the tax they will retain.”
In the previous week, the commission was invited to speak at the county board’s Legislative Committee on the room tax reform legislation.
“Our recommendation to the county board is we support this legislation,” Moneypenny said. “It’s right for the innkeepers. It takes care of them in a way to help make them whole again for a tax they had nothing to do with. They still pay credit card fees on the sales tax, just like retailers and just like restaurant owners. It really levels the playing field across the state. It really puts tourism on a different level, where a dollar raised for tourism promotion is a dollar for tourism promotion. It’s not a helter skelter around the state, whatever that local municipality decides to do with it. We just believe it’s the right thing to do.”
But there is a cost involved.
“Based on 2012 figures, it’s about $105,000 for the county,” Moneypenny said. “The 19 communities will take about a $31,000 to $32,000 hit collectively (see sidebar for individual costs to communities). We [the DCVB] take about a $70,000 hit. We still believe it is the right thing to do.”
Not everyone on the commission agreed, especially those who also serve as elected officials in their respective municipalities, such as Gibraltar Town Board member Dick Skare.
“If you’re familiar at all with local government, every time you turn around the legislature is doing something that’s reducing the ability to raise taxes or to pay for things, and now the legislature once again is taking something away,” Skare said, adding that even if it is just a few thousands dollars, “try to raise taxes to make up for that new shortfall.”
But most at the meeting felt with a majority of the money going back into professional tourism promotion and marketing, there is a better chance of making up that three percent down the road, or, as expressed by commission member Fred Anderson, who owns The Ashbrooke in Egg Harbor, “At the end of the day, my message is, let’s grow our businesses so we don’t have to worry about the three percent.”
In 1992 the state’s room tax law was changed to state that 70 percent of revenues be used on tourism marketing and promotion, but that was revised in 1994 with the addition of a grandfather clause that allowed municipalities the right to spend the room tax money how they had always spent it if they were collecting room taxes before 1994. The new legislation would eliminate the grandfathering.
Since Door County was following the model in state statutes, it is poised to comply with the room tax legislation should it make its way through the Legislature in this session, which ends in April. But Door County is unique in the state, and is the only county or governmental entity in the state with a Tourism Zone Commission formed to collect, disperse and enforce room tax revenues, and follow the 1992 state mandate to funnel 70 percent of the room tax revenue into tourism marketing and promotion.
Other communities will have a much harder time complying. That’s why the legislation gives them six years from adoption to comply. If passed by this Legislature, the new room tax law would begin in 2015.
That still is not enough of a cushion for communities that are running their day-to-day operations with the help of room tax revenues, which is why one of the most vocal opponents of the legislation is the League of Wisconsin Municipalities.
“That’s really problematic for the communities that have been using some or all of those dollars for general fund purposes,” said Curt Witynski, assistant director of the League of Wisconsin Municipalities. “Some communities, like Brookfield, are using 100 percent of that for their general fund, for police or fire.”
He said with Wisconsin municipalities operating under strict levy limits, there are no other revenue streams to fill the hole in their budgets that would be created by diverting room tax revenue from their general funds to tourism promotion and marketing.
“We [local governments] would like to have the discretion to spend that 70 percent on what we think qualifies as tourism promotion and development,” Witynski said. “It’s all over money and control of how it’s spent.”
“We know it’s not easy. Anyone in municipal government knows it’s not easy. Once dollars have been ingrained, it’s hard to replace them or remove them. But at the end of the day, it’s the right thing to do,” Moneypenny said.
The three percent reimbursement that would go to lodging owners to cover credit card costs would affect the 19 communities of Door County, based on 2012 room taxes, to the tune of:
Baileys Harbor: $2,219
Clay Banks: $21
Egg Harbor (Town): $2,654
Egg Harbor (Village): $2,942
Forestville (Town): $13
Forestville (Village): 0
Liberty Grove: $2,045
Sister Bay: $3,780
Sturgeon Bay (City): $4,396
Sturgeon Bay (Town): $148
Washington Island: $549
Source: Door County Visitor Bureau