Municipal Officials Control of Room Tax
February 25, 2014
Dear WH&LA Lodging Member:

Municipal Officials Control of Room Tax. This is the crux of what municipal officials are protesting they will lose (although wisely calling it "local control" in public) in AB 385/SB 301 on Room Tax Reform. They do not like the inclusion of tourism business owners/operators in the decision making process for how the portion of room tax revenue required to go to tourism promotion & development, is spent. They do not like the state prohibiting them from keeping more than 30 percent of room tax revenue for their own municipal uses. They do not like penalties should they choose not to submit an annual report on room tax to the state. And they do not like allowing lodging properties to retain 3 percent of the room tax revenue they collect, to offset your credit card processing costs in collecting the tax.

Yesterday the Assembly Committee on Tourism was scheduled to vote on AB 385, as the Chair was confident that the votes were there to gain passage, even though one legislator in favor was on vacation and could not vote (presence is required to vote at Assembly committee meetings). However, with unfortunate timing, the bill sponsor was too sick to drive the 3+ hours to the meeting (and knowing this legislator, he truly was ill or he would have been there leading the charge), leaving us one more vote down. Even more unfortunate, with less than one hour to go before the meeting, Rep. Mike Endsley (previously confirmed as a "yes" vote) succumbed to pressure from local officials in Sheboygan and switched to being in opposition. Committee Chair Dean Kaufert, a strong supporter of Room Tax Reform, was wise in deferring both discussion and a vote on AB 385 to another Executive Session, as we were left with insufficient votes for passage. Almost every member of the Committee has experienced pressure from at least one local officials in their district to oppose the bill, with some unable to avoid this stronghold in an election year, and others standing up and saying the proposed reform is the right thing to do statewide.

In addition, yesterday Rep. Joe Sanfelippo (new representative from the New Berlin/West Allis area) introduced Amendment 3 to AB 385, which we strongly oppose as it removes the strongest components to reform. This amendment would: 
  • Remove the requirement for tourism industry representation on a Tourism Commission or a Tourism Entity
  • Allows municipalities to continue to determine tourism promotion & development expenditures, as they do now
  • Removes the phase-out of areas currently grandfathered to keep all or most of room tax revenue for municipal use
  • Eliminates the allowance for lodging properties to retain 3 percent of collected room tax for their out-of-pocket card processing costs
  • Continues with the annual report on room tax submitted by each municipality; HOWEVER, removes all penalties if they choose not to. 
Other than completely stopping Room Tax Reform, this amendment is a municipal official's dream version, as basically the only thing left is the annual report without any penalty for ignoring this.

Next Steps 
Chair Dean Kaufert will hopefully be able to schedule another Executive Session when everyone will be there to vote within the next week or two, to allow time for the bill to move to the Assembly floor for a vote before they conclude their session - now predicted to be the third week in March. We cannot afford to have other Committee members succumb to the pressure from their municipal officials.

We also need to drum up the interest of more Assembly Representatives to help spread the word of how Room Tax Reform can help grow local tourism, and add local jobs. We will need your help in contacting your state representatives to express this. In addition, Assembly Speaker Robin Vos and Assembly Majority Leader Bill Kramer need to hear from your legislators that AB 385 is important to the tourism industry and to jobs growth, and after 20 years, the reform is needed now, not next session.

We also need to be clear that Amendments 1 and 2 are good additions to AB 385, however Amendment 3 strips the bill of all the critical components to really fix room tax. We knew that this Reform would be a tough battle, but the tactics from our opposition have been beyond what was anticipated. We will continue to keep you informed, and we truly appreciate those of you who took (and will continue to take) the time and effort to communicate to state legislators in the professional manner our industry adheres to.

Further resources: 
Link to AB 385 information, including the bill language and introduced amendments: Link to WH&LA information on Room Tax at our website:


Contact: Trisha Pugal
Wisconsin Hotel & Lodging Association