Waukesha, Brookfield among cities opposed to amending ‘room tax’
Alterations could cost them hundreds of thousands

By Matt Masterson - Freeman Staff

May 22, 2015

WAUKESHA - A proposed change to the way communities statewide are able to charge and spend taxes levied on hotel rooms, if approved, could cost local municipalities hundreds of thousands of dollars in the coming years.

The Wisconsin Legislature is considering a proposal to amend its “room tax” that could reduce the amount of money municipalities can use from collecting that tax on emergency services, such as police and fire, and require it be put toward hotel advertising, according to the League of Wisconsin Municipalities.

In an open letter to Wisconsin communities, League of Wisconsin Municipalities Assistant Director Curt Witynski said the hotel industry is pushing to give hotel owners exclusive control over how the tax money is spent.

“Communities that adopted room tax ordinances prior to 1994 must reduce their support for police, fire, parks and streets and spend more of that money on hotel advertising,” he said in the letter. “The amount cities can use for essential services will be frozen this year and reduced over the next five years until it is down to the dollars collected during the depths of the 2009 recession.”

Witynski claims that as many as 69 communities in Wisconsin could be affected, including the cities of Brookfield, New Berlin and Waukesha.

“If it is passed the way it has been proposed, the city will lose up to $250,000, approximately, from its general fund,” Waukesha Mayor Shawn Reilly said to city alders during a Common Council meeting Tuesday. “Obviously you all know how much that will affect the city of Waukesha.”

He urged council members to reach out to their representatives in Madison - State Reps. Scott Allen, R-Waukesha, and Adam Neylon, R-Pewaukee, as well as State Sen. Paul Farrow, R-Pewaukee - to voice their concern with and opposition to the proposed changes.

Reilly said he had spoken expressed his concern to Madison representatives on multiple occasions, adding there has been talk that the changes could be made by the Joint Finance Committee at the last minute in the budget process.

A ‘substantial impact’

Similar legislation was introduced in the previous two legislative sessions, but was unsuccessful. Now the Wisconsin Hotel & Lodging Association is attempting to attach the proposed changes to the upcoming state budget through the Joint Finance Committee - eliminating the possibility of public comment or discussion - according to Brookfield Mayor Steve Ponto.

“This was sprung on members of Joint Finance - our representative found out about it on (last) Wednesday when it was coming up the next day,” Ponto said. “So if members of the Joint Finance Committee don’t know it is coming until a few hours before, how is the public supposed to know what is going on and be able to comment on it?”

On Tuesday, the Brookfield Common Council unanimously approved a resolution expressing its opposition to the room tax changes.

Ponto said the changes would constitute a non-fiscal policy matter, which does not belong in the state budget.

There are 13 hotels in the city and Town of Brookfield, which combine to make up the third largest concentration of hotel rooms in the Metro Milwaukee area behind downtown Milwaukee and the General Mitchell International Airport area.

Ponto said the city would lose an estimated $400,000 if the changes go through. In 2015, it’s estimated the city would take in $2.5 million from room tax revenue collections and  75 percent of those collections - about $1,903,000 - would go to general fund purposes. That total would be reduced if the changes are approved.

“It has a big impact on the city and town of Brookfield,” Ponto said. “It has a substantial impact on the city of New Berlin, it has a substantial impact on the city of Waukesha.”

Email: mmasterson@conleynet.com