Sister Bay to Consider Increase in Sales Tax

Sister Bay is moving forward with implementation of a one-half percent increase in the sales tax for a majority of businesses in the village. The tax, called a “Premier Resort Area Tax,” would bring in more than $174,000 annually to be used on infrastructure projects in the village.

Village electors vote on whether the tax is implemented.

“The difference is you’re letting your tourists and visitors pay for their share,” said Dave Lienau, village president. “The village property taxpayer, should they be responsible for the wear and tear of 250,000 people coming in here on the weekends?”

The tax would be implemented on top of standard sales tax at most restaurants, bars, retail and lodging facilities. While the tax would apply to anyone purchasing something at these vendors, calculations from village Finance Director Tasha Rass indicate a majority of the revenue would come from tourism spending.

If the village were to raise the same dollar amount estimated in the new tax through property taxes instead, it would be equivalent to an eight percent increase in the municipal tax rate for a property owner. For every $100,000 in assessed property value, that would mean an increase of $44 in property tax each year.

Instead, the increase in sales tax will spread the burden between all who purchase goods in Sister Bay, not just those who own property there.

Rass said road projects coming up in the next five to eight years amount to $3.5 million that the village does not have money for. Under the terms of the resort tax, the village could use those funds for that infrastructure.

“We have roads that need to be repaired, it’s going to cost us x dollars,” said Rass. “Do you want to put this on your taxes or do you want to have tourism dollars pay for that?”

Consideration of the resort tax was on the agenda at the May 16 Finance Committee meeting, but the committee did not discuss it or make a motion recommending it to the board before the village board considered it on June 27.

The board was unanimously in favor of moving forward with the process of implementing the tax. The village board will pass a resolution declaring itself a premier resort area. Village residents will then vote on a referendum allowing the tax at the 2018 spring primary Feb. 20 or, if there is no primary, at the general election April 3. The village would then have to adopt an ordinance approving the tax, which would allow for public input again. If approved, the tax would go into effect at the beginning of the quarter following its approval.

Six other Wisconsin municipalities have adopted the resort tax: Rhinelander, Stockholm, Eagle River, Bayfield, Wisconsin Dells and Lake Delton.

Wisconsin Act 440 in 2005 created an exception to the standard allowing Sister Bay and Ephraim to implement the tax. The statute requires a municipality to have at least 40 percent of its assessed value of taxable property used by tourism-related retailers. Act 440 allowed Sister Bay and Ephraim to implement the tax even though they didn’t hit that 40 percent mark.

Board members discussed creating a marketing campaign to inform village residents of the referendum that will take place.

“You should let the public know clearly what it is you intend to spend the money on, cost estimate for those projects and how this is going to benefit them,” said Zeke Jackson, village administrator.

Board member Denise Bhirdo took issue with the use of the word “marketing” in educating the public.

“It sounds like we’re trying to sell somebody a bill of goods,” said Bhirdo.

So village staff will begin preparing a public education campaign to inform voters of the upcoming resolution and referendum.