St. Germain board considering room tax increase

The St. Germain Town Board and members of the town’s chamber of commerce discussed the possibility of raising the room tax rate during the board’s Jan. 25 meeting.

Room tax is charged to out-of-towners who rent lodgings in a municipality. The proceeds are split between the chamber of commerce and the local government.

Supervisor Brian Cooper raised the possibility of an increase. He said he was inspired by a recent stay in a Burlington hotel.

“I saw their little note on the back of the door, and I thought ‘Holy cow: we’re at four-and-a-half percent; they’re at 12’, so that’s where that started,” he said.

“The highest that we can go — as a town that’s less than 360,000 people, I believe is what the number is — was 8 percent,” Cooper said. “You might go down to Milwaukee and say ‘Oh, man! Room taxes are 13, 14% there’. We can’t go that high.”

“My original thought is that maybe we could go to six,” he said. “We’re at four and a half right now, but we could go to eight ... It’s there for discussion.”

“It’s been at four-and-a-half for quite a while now,” said town board chairman Tom Christensen. “And I think there’s plenty of requests for money,” to both the town and the chamber for tourism-related spending.

“They (the chamber) obviously spend a lot more on the marketing part,” Christensen said. “We’re more in the development part of it, and there aren’t really any restrictions on us ... I believe that we could all do a better job with some of the activities that we use the money for, and also some of the facilities in town that we use the money for.”

“I sat down and I called all the town clerks in our area that have room tax, and I asked them what their rate was,” Cooper said. “I think the highest one was six percent.” 

“That’s changed, I think,” Christensen said. “I was told Sayner is going to eight percent sometime here in the near future, if they haven’t already.”

“Their board president announced it at our last Vilas meeting,” confirmed Stephanie St. Germaine, executive director of St. Germain’s chamber.

“Well, the chamber can’t make the decision,” interjected supervisor Ted Ritter. “The town has to make the decision.”

“That’s right,” Christensen said. “It’s a function of the town board in order to change it. But I think the town board’s looking for something from the chamber as to the chamber’s feelings about the amount it should go up or not go up. And I think that we need to continue working together, because we’re partners in this.”

“Thank you for including us in this, even though we know you don’t have to,” St. Germaine replied.

According to town treasurer Jeanna Vogel, each half-percent increase to the room tax rate would mean roughly an additional $50,000 for the town and the chamber to split.

“And, so you remember, the split is 70-30, with 30 going to the town,” Christensen reminded the room. He also said an increase in the rate would not require any modification to the contract between the town and the chamber. 

Questions were raised as to when the proposed hike might go into effect. Both Vogel and Angela Foulks, president of the chamber board, recommended holding off on the implementation until sometime into the calendar year 2025, as lodging facilities commonly take reservations as far as 365 days in advance and sign contracts with renters agreeing upon a fixed price, taxes included.

“I would think that’s up for grabs,” Christensen said regarding the timing. “But that is a consideration to look at, and it will be noted in the discussion ... The time it would start is really immaterial, because you’re going to screw somebody up, sometime, somewhere.”

“That decision is not being made here tonight,” Christensen said. “Just realize it might not go exactly the way everybody thinks it should.”

Foulks said she had discussed the idea of an increase with the chamber’s board, and she described the reaction as “mixed.”

“This is a very new thing that we weren’t expecting, so obviously, we’re very open to the idea of an increased room tax, because we’d love to see more revenue flow through the chamber,” she said. “There were some concerns given the new Vilas County zoning permit in that so many changes to lodging members in a single year — or in 2025 — might be disadvantageous to our lodging members. So we’re a little bit split.”

“I think you guys probably want to talk amongst yourselves first,” Christensen suggested to St. Germaine and Foulks. “Maybe we can get together the week after both of our boards meet.” The board voted to table discussions until its second meeting in February.

Ritter spoke with The Lakeland Times the day after the meeting.

“I completely understand why both the town and the chamber would want more money,” he said. “Knowing that the town board, in the past two years, has increased the base levy by a total of $300,000 to address non-routine maintenance of roads and town buildings ... Knowing that we have done that, it makes me feel a little bit better that we can demonstrate to the community that we’re not just tapping you. If we increase the room-tax rate, most of that will go to the chamber. But 30% of it stays with the town, and every one percent would mean $100,000.”

Ritter said that would mean more money “available for things that we just can’t get done otherwise; things that are for the betterment of the community. So I’m inclined to be in favor of it. I would not support eight percent. I would support an increase of two or three percent, max.”

“But before I would support it,” he elaborated, “I would want the owners of the St. Germain lodging establishments — which includes private homes that are being rented — to have the opportunity to voice their opinion of whether it’s good or bad. I want them to feel like they at least had an opportunity to be heard, rather than saying ‘Your rate just increased’ or ‘Your rate is about to increase’ ... Those people should have an opportunity to speak to this before I’ll support it.”

Ritter was asked about the potential downside(s) to a room tax increase.

“I think there will likely be a perceived downside, and we’ll likely hear about that when those businesses are given the opportunity,” he answered.

“They’re going to say things like ‘Well, now you’ve just out-priced a lot of people from this market, and we’re going to lose people. They’re going to quit coming here and go to places that don’t have room tax’, and they’re going to tell us where those places are. All of that, in my mind, is short-term perception, which will prove not true in the long-term.”

“It will be the same kind of reaction that surfaced — vehemently — back in 1998-ish: when the town was floating the idea of a room tax as a brand-new funding source,” Ritter said. “It divided the community, but they got over it.”

“I think that if the town increases the rate modestly — and by modestly, I mean something other than going up to the full eight percent — if we were to increase it by up to two percentage points, there will be a bit of a rough patch to get through, but we’ll get through it. In the end, we’ll have more money to work with.”

“And again, we will have proved to the people who are paying more property tax because of our raising the levy over the last two years that we are also finding other sources,” Ritter said. “We are not just relying on the property tax to meet the needs of the community.”