Attempts to gain permission from the state to institute a Premier Resort Area Tax (PRAT) in Sturgeon Bay have failed thus far, but a new bill from Rep. Joel Kitchens and others would allow the City of Sturgeon Bay to create the tax, which the city hopes to use to fund its deteriorating roads.
A PRAT is a 0.5 percent increase in the sales tax within a community, the intent of which is to help tourism-dependent areas fund infrastructure that’s used by visitors who do not pay property taxes.
The state law governing PRATs is written in a way that narrowly tailors it to apply only to Wisconsin Dells and Lake Delton, but additional communities, including Sister Bay and Ephraim, have since been granted permission. Sister Bay instituted a PRAT in 2018.
Sturgeon Bay lobbied for permission to create a PRAT during the 2019 Door/Kewaunee Legislative Days, when Department of Revenue representatives said they would discuss it with Gov. Tony Evers’ staff. At the time, Kitchens believed the change would go through the budget rather than as a stand-alone bill.
After the change was left out of the budget, Kitchens and other northern Wisconsin legislators introduced a bill to grant permission to Sturgeon Bay, Minoqua and Tomahawk.
“I thought it had a good chance of getting in the budget,” Kitchens said, adding that he was disappointed it was not included.
The Joint Finance Committee (JFC) is the primary body that crafts the state budget in the Legislature. With so many communities seeking an exemption to the standards originally set in the state’s PRAT law, JFC members felt that perhaps it was time to look at the law itself instead of granting individual exemptions for specific communities. Kitchens felt that if a community wants to levy the tax on itself, it should be allowed to do so.
It is unclear how the bill will fare in the legislature, but Kitchens is cautiously optimistic.
The city intends to use the estimated $800,000 in additional revenue for roads. An Ad Hoc Committee on Funding for Local Street and Infrastructure determined the city needs an additional $720,000 in spending to return to a 25-year replacement cycle. Currently, the city replaces a road once in 55 years, which is approximately double the lifespan of most roads. City residents showed support for a PRAT through an advisory referendum, which passed with 71 percent of the vote.
The state budget did include an additional $75 million in grant funding for local roads, with $19 million of that dedicated to village and city projects, but it’s unclear how much of that money will go to Sturgeon Bay. In addition, the PRAT would represent a more consistent funding stream.
“We did get some increase in local roads, but it’s not enough to fix the situation in Sturgeon Bay,” Kitchens said.
A version of the bill has already been introduced in the Senate by Sen. Tom Tiffany. Kitchens expects the Assembly version of the bill will be introduced soon.