Brown Deer officials go on record against room tax change

Nearly $350,000 in revenue could be lost if bill passes

Oct. 9, 2013

Brown Deer — Brown Deer village administrators estimate a nearly $350,000 loss in revenue if an amendment to the state room tax law is approved by the Legislature, prompting the Village Board on Monday to approve and publish a resolution in opposition to the change.

State law allows municipalities to collect a tax on hotel booking fees, commonly referred to as a "room tax." In 1994, a change in the law required municipalities establishing room taxes to spend 70 percent of the revenue on "tourism promotion or development," though municipalities like Brown Deer that were already collecting were grandfathered and could keep using the tax revenue for general operating purposes.

The changes proposed by Senate Bill 301 and Assembly Bill 385 would require municipalities to divert 70 percent of room taxes to a "tourism entity or commission." A tourism entity is defined in the law as a local tourism nonprofit, and a tourism commission is defined as a group created by a municipalities or group of municipalities to represent a zone, composed of a majority of restaurant, tourist attraction or lodging facility owners or operators.

Based on the adopted 2013 budget, which includes approximately $494,000 in total room taxes, the village would have to give up about $346,000 if the room tax amendment passes — or about 1.7 times the village's annual parks and recreation budget of $202,000, according to an online 2013 village budget.

Village President Carl Krueger commented the change "rescinds a community's right to hotel room taxes" and called the potential loss of revenue "a substantial impact to our municipal budget."

According to a League of Wisconsin Municipalities newsletter quoted by Assistant Village Manager Matt Janecke, the bill may still be recommended to the Assembly, despite opposition from a number of municipal representatives at a recent Assembly Tourism Committee meeting.

"Municipalities are frustrated by the state's tendency to interfere with matters of local control," LWM wrote to the Assembly committee in an Oct. 2 memo. "Given the severe financial stress municipalities are under, it doesn't make sense to reduce a source of revenue that some municipalities use to pay off convention center debt, to pay for police and fire services provided to hotels, or to pay for other municipal services necessary for tourism to thrive."

The Village Board voted unanimously to approve the resolution in opposition to the change. Trustee Tim Schilz was excused.

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