Room Tax Action Needed, SIS Program,
Minimum Wage, Litigation
March 7, 2014
Dear WH&LA Lodging Member:
Today we are featuring just a few key updates you should be aware of as our state legislative session is nearing it's conclusion.
First, as you have likely heard, the Assembly Majority Leader (Rep. Bill Kramer) was unanimously voted out of office this week following alleged behavior universally deemed reprehensible. The Assembly Republicans elected State Rep. Pat Strachota (R-West Bend) as the new Majority Leader until after the elections, as she has stated she is not running for office again this fall, meaning that a different new Leader will be chosen following the fall elections.
Room Tax Reform Action Needed Now!
We are now at a critical juncture with AB 385 & SB 301 on Room Tax Reform, as we are hoping to have Committee votes in the next week or two, after which the bills will go rather quickly to the floor in each house for a vote. We have been meeting individually with as many of the Assembly Representatives (or their key staff) as possible to explain in more detail what the reform package entails, and the improvements provided in Amendments 1 & 2. In addition we are explaining how Amendment 3 introduced by Rep. Sanfelippo basically removes all critical components of the bill, which would result in minimal improvement to Room Tax reform in our state.
We need you, and any key staff at your property who also support statewide Room Tax reform, to contact your Assembly Representative by this Monday (March 10), making the following points:
- Please support AB 385 on Room Tax reform, along with the two amendments introduced by the bill sponsor (Amendment 1 & 2 only) when it comes to the floor!
- We need to clean up the use of Room Tax statewide to allow local tourism to grow around the state, instead of having a large portion going to non-tourism expenditures.
- This is a tax only on our lodging guests, and it was created to fund local tourism promotion. Over the years, too much has been raided for other uses that do not help to grow local tourism.
- We need to refine the statute to allow for local input and decisions, but with state guidelines to make sure the majority of this tax on our guests (the taxpayer without representation) goes to local tourism promotion and tourism development, as originally intended.
- Please do not support Amendment 3 as it removes all of the many portions that would provide meaningful and effective reform.
If you know your state Assembly Representative's name, you can send them an email to rep.(insert their last name)@legis.wisconsin.gov. If you are not sure, go to the following site and enter your home address and zip code and it will provide the name and a link to their email address: http://legis.wisconsin.gov/Pages/waml.aspx.
The following is available for your handy reference:
Minimum Wage Increase Proposals
While individually, members may have differing personal preferences regarding proposed increases in the state or federal Minimum Wage rates, by far most small and large businesses find that increased Minimum Wage rates will have a negative impact on their business, and would impact their ability to hire or maintain the hours for part-time and full-time staff to service customers without passing the increase on through increased rates.
Earlier this week the results of a recent statewide survey by a professional research firm (retained by four business associations) was released that showed the following:
- Of 505 likely voters surveyed, only 53% supported the concept of a minimum wage increase initially
- When just one of the likely consequences of an increase (the potential loss of jobs) was mentioned, the support dropped to just 39%
The following provides further information on these results: http://www.wmc.org/cms/wp-content/uploads/2014/03/TarranceMemo_MinWage_3-4-2014.pdf.
In addition, the non-partisan Congressional Budget Office (CBO) recently predicted that nationwide an estimated 500,000 joss would be lost as a result of an increase of Minimum Wage to $10.10 per hour (as proposed by President Obama and in a recent bill introduced at the state level). Additional research (by the Employment Policies Institute) predicted even higher job losses of over 900,000, with a state-by-state break down noting job losses exceeding 27,000 jobs in Wisconsin alone.
The WH&LA has opposed such increases in the state or federal Minimum Wage rates, especially those with annual indexing that increases it further each year, for numerous reasons, including:
- Whether a property employs a lot, a few, or even zero individuals at the Minimum Wage who would be initially impacted, another major impact would be the need to also adjust the wages of those employees above the set minimum, who would expect to be paid more than the Minimum Wage rate or more than those in entry level positions. Frequently called the ripple-up effect, this adds considerably to the total cost of wages, and too often is ignored in the consideration of real costs resulting from an increased Minimum Wage rate.
- With costs increasing, the primary business choices are to either employ less people, cut the hours of those you do employ, reduce your services, or to raise costs to your customers - none of which would be well received, and could result in either a lower level of services provided, or in fewer guests willing to pay the increased rates.
- The employment marketplace frequently already dictates wage levels - for example, in areas where it is difficult to hire or retain qualified housekeeping associates, their wages are much higher than the Minimum Wage, which may be different in other areas. In addition, in areas with a higher cost of living, wages are generally higher.
It appears that the introduced state legislation proposing a considerable increase in the state Minimum Wage, along with "indexing," which would increase the rate further each year based on increases in the Consumer Price Index (CPI), will not advance before the session ends. On the federal level, the American Hotel & Lodging Association is providing updates on where this may go in the coming months.
SIS Program Update
The WH&LA previously reported on what had happened with the Request For Proposals (RFP) for the Wisconsin Specific Information Sign Program (SIS), following reports from many members who received communications from the current vendor advising of significant increases with another vendor. To ensure our concerns with potential rates were known by the Department of Transportation (DOT), who is going through negotiations with the new chosen SIS vendor, the WH&LA sent a letter to Secretary Mark Gottlieb, the head of the DOT.
In his recent response letter, Sec. Gottlieb confirmed that no contract has been signed, and pricing and terms are under negotiation, and that the DOT is "keenly aware of the concerns of the business community regarding potential changes in the cost to advertise these signs." He further stated, "We will be mindful throughout contract negotiations of the impact that any cost increase could have on tourism, travel, and the hospitality industry in our state."
Litigation on Hotel Inventory System
We recently learned of litigation filed in the U.S. District Court in Minnesota against a number of chains and CVBs regarding their use of a Future Hotel Inventory System (FHIS) that has been marketed to CVBs and to some hotel companies as a way to determine room demand in a market for any set of future dates. The claim is that this is an information exchange program that violates the anti-trust law (Sherman Act) as competitors allegedly set their rates based on this information, and it is allegedly collusion. While no Wisconsin CVBs or hotel companies are named, it may be possible that the software company that developed and is marketing the program may be contacting businesses in our state as well. It may be wise to ask any such vendor if their product is in any way affiliated with the litigation filed in Minnesota to ensure that you have all the facts when making a decision.
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