City wishes state would put tax issue to bed

Oak Creek - In 2011, the city's 13 hotels generated $542,292 in room taxes, most of which was used to support the general fund.

That revenue, though, could be in jeopardy, if a bill introduced by Sen. Luther Olsen, R-Ripon, changing room tax regulations becomes law.

"It certainly offers an additional challenge to Oak Creek," said Doug Seymour, the city's director of community development.

The Common Council on Monday night unanimously opposed the Senate bill, as it restricts how the city can use proceeds from the room tax, which is 6 percent in Oak Creek.

Also opposed to the bill is the League of Wisconsin Municipalities, said its assistant director, Curt Witynski.

The bill's supporters, he said, include the Wisconsin Association of Convention and Visitors Bureaus and the Wisconsin Hotel and Lodging Association.

"This bill was requested and drafted for the innkeepers and convention and visitors bureaus," he said.

Under the bill, Witynski said, many municipalities would no longer have a say on how they use the room tax they collect. "I've heard from Wauwatosa," he said. "They're concerned about it."

What the bill does, he said, is dramatically change the original 1960s' law allowing municipalities to impose a room tax.

At that time, municipalities decided how to spend the revenue. But in 1994, that bill was changed, Witynski said, and municipalities - unless grandfathered in - were required to spend 70 percent of the room tax revenue on tourism development.

"This bill, now, would say municipalities have no discretion on how they spend that 70 percent," he said.

Seymour said Oak Creek was one of the communities that was exempt from the clause requiring it to devote 70 percent of its room tax revenue to tourism development.

He said that the council had dedicated $400,000 of the amount it collected in city room tax to the general fund, while the remainder was distributed to the Community Development Authority for an economic development fund that "created opportunities for business to locate here."

"It would take flexibility away from Oak Creek," Seymour said of the bill. "Right now, the council has discretion over the entire amount of those funds."

Meanwhile, Rep. Mark Honadel, R-South Milwaukee, said he believed the intent of the measure is to help tourism, but he said it could be done in a way that is "not so painful" to municipalities as they struggle to balance budgets.

"This doesn't seem like a good answer to fix an old problem," he said.

He said the shift in the amount municipalities use for tourism purposes could be incrementally "ratcheted back."

And after conferring with other legislators, Honadel said he doesn't think the bill has the support it needs to pass.

"After doing a quick survey in the Capitol, I don't think this bill is going anywhere fast," he said.

Witynski agreed that, with the legislative session ending March 15, time might be on Oak Creek's side.

"I think it's a controversial enough bill that the Senate doesn't have the stomach to enact it and make the communities angry," he said.