Room Tax Reform Proposed

A bill to reform state room tax rules is in the Assembly’s Committee on Tourism, but most local tourism leaders agree the legislation probably won’t affect the way Door County does business.

The legislation will require municipalities to dedicate at least 70 percent of room tax collections to tourism promotion, and keep the other 30 percent to use however they choose. Some municipalities that started collecting room tax before May 13, 1994, don’t follow that 70/30 split. If this legislation passes, those municipalities would have until 2020 to comply.

“We’re going to stand behind this [legislation] because it levels the playing field,” said Jack Moneypenny, president of the Door County Visitor Bureau. “It puts room tax dollars where they should be in communities that haven’t been using them for that.”

Door County is already in compliance with the proposed changes. The county’s 19 municipalities give 66 percent of the room tax they generate to the Door County Visitor Bureau (DCVB) to use for marketing, keep 30 percent and give four percent to the Door County Tourism Zone Commission (TZC) to collect and track room tax.

Robert Kufrin, former chair of the Door County Tourism Zone Commission, is concerned the new legislation would require small municipalities to pay for collecting and distributing the tax, but Moneypenny said the DCVB would use the DCVB’s 70 percent allotment to fund the TZC if Door County had to change its procedure.

“To us [the TZC] is a necessary part of doing business,” Moneypenny said at a Door County Legislative Committee meeting. “If it becomes a matter of [municipalities] sending us 70 percent and we send four percent back to the TZC, that doesn’t matter to us.”

Kufrin doesn’t like that idea because it ties the TZC, a government entity, to the DCVB. Right now, the TZC could choose to split the 70 percent of room tax tagged for tourism promotion to another marketing entity, but likely couldn’t do that if it got its funds from the DCVB.

Instead, Kufrin wants Door County to be grandfathered in and allowed to continue operating the way it already does.

“I think it is more important for the local government to be independent of the vendor than to be dependent on the vendor to collect tax,” he said.

Josh Van Lieshout, current TZC chair and Egg Harbor Village Administrator, said the proposed legislation is vague about how municipalities should pay for collecting and administering room tax.

“The legislation doesn’t really talk about how commissions work and it doesn’t talk about administrative cost. It doesn’t talk about a lot of stuff,” Van Lieshout said.

“While Garey [Bies] told us he doesn’t think it’ll affect us… It’s nice to have that in black and white, and I think that’s the crux of one of Bob [Kufrin’s] points. The first one is ‘let’s just get some black and white, give us the exemption to keep doing business as we’re doing it’.

“The contrary opinion to that is ‘why?’ Consensus at this point is [the legislation] is not going to affect how we do business anyway, so let’s not call attention to ourselves.”

Read Bies’ comments on the legislation here>>

Fred Anderson, owner of The Ashebrook in Egg Harbor, is a board member of the Wisconsin Hotel and Lodging Association (WHLA), an organization heavily involved in writing the proposed changes to room tax. He said the only part of the legislation that will affect Door County is a new rule that allows innkeepers to keep three percent of their room tax collection in order to offset the cost of collecting the tax.

That means when someone pays for a night in a $100 room, they pay an additional $5.50 in room tax. Under the proposed legislation, the lodging establishment would be able to keep three percent of that $5.50, which adds up to 16.5 cents.

“Across the board from small properties to large properties, three percent would be a good average to what each individual innkeepers’ cost would be to collecting in credit card charges,” he said.

The legislation doesn’t say innkeepers can only keep the three percent on credit card transactions.

“That 2.5 to 3 percent [fee] comes out of almost every transaction we do via credit card,” said Ned Neddersen, owner of the Eagle Harbor Inn in Ephraim and member of the DCVB board of directors. It is a large factor in our annual budget. It seems equitable that the lodging owners who, in order to be in compliance with state law, are forced to administer this process of tax collection get some relief in that cost.”

Kufrin is also concerned lodging establishments would keep that three percent of room tax collection even if customers don’t pay with credit cards, since the legislation never specifies processing fees for credit cards or requires lodging establishments to prove they were paid with credit cards.

Ultimately, he’d rather see that money go to tourism promotion.

“Door County has grown every year in its position in terms of state tourism destinations,” he said. “If those dollars weren’t there, business, retail wouldn’t exist because there’s no way of driving people to coming to Door County.”

The TZC and DCVB have taken no stand on the three percent return on credit card fees.