St. Germain proposes room tax increase

The town board of St. Germain voted unanimously during its Thursday, Sept. 26 meeting to advance a proposed plan to raise its room tax. 

To that end, the board will host a public hearing later this month.

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.

Currently, St. Germain charges four and one-half percent room tax. Per state statute, municipalities with a population of fewer than 360,000 may charge up to eight percent.

During the September meeting, town board chairman Tom Christensen shared a spreadsheet of municipalities and their room-tax rates furnished by the State of Wisconsin, which was last updated in December 2023. 

“The Wisconsin average — at that time — was 6.27 percent,” Christensen said. “The Vilas County average was 4.68. It is out-of-date, but it’s the most current statistic that the state has available through the Department of Revenue.”

“It does look like a slow process,” he said, “But there are plenty of towns and cities and villages that are going to the maximum rate of eight percent.” 

“We talked about this back in January,” said supervisor Brian Cooper. “And as I recall, the chamber was going to inquire with their members as to any thoughts they might have. And I don’t know: has anyone heard from the chamber at all regarding that?”

Angela Foulks is the principal officer of the St. Germain Chamber of Commerce. She was in attendance at the meeting.

“We talked about it at length,” she said. “I personally don’t have an opinion about it one way or another, but our lodging members keep telling us that, because they book out a full year in advance…they want to be sure they have enough time to implement it and don’t have to go back to their guests that are already booked for summer of 2025 and ask for more tax, or either be liable for it themselves.”

“Understandable,” Cooper replied. “And I think that when the state decides they’re going to raise their sales tax, it just happens on whatever date and you’ve just got to bite the bullet that one time, and it will only be for one year.”

“I don’t think you understand how much revenue is on the books for summer of 2025 at this point,” Foulks retorted. “Every single property manager out there books 365. Their summers are booked. And that’s your third quarter; that’s the largest part of our room tax. That’s a lot of money for either us to recuperate or for us to go back to our guests and try to get it from them. It’s going to be logistically a nightmare.”

Treasurer Jeanna Vogel concurred.

“You’re also opening up the potential that if I’ve made a deposit, now you’re telling me you’re going to charge me more,” she said. “You’re breaking your contract with them. They could go elsewhere. When you buy a plane ticket for next year, if the sales tax goes up, it’s not like the airline is going to come back at you for it.” 

“So, basically, there’s no good time to change it?” Cooper asked. 

“I do think this is a good time to change it,” Foulks answered. “Just think about implementing it for 2026.”

“I think that’s too far out,” Cooper said.

“I can understand what you’re saying, Angela,” Christensen said. “It’s going to create a problem. We do need to get it far enough out, I believe, and January 1, 2026 makes sense. I’m good with that date to get it started and get it implemented so that everyone understands that it is changing.”

“My preference would be a January 1 date. It’s clean,” Vogel added. “By the time we have a public hearing and get this approved and passed, we’re going to be well into the fourth quarter. January 1 is the start of that next quarter. That, to me, seems like the appropriate start time. That also gives us time to communicate it.”

The town is facing a conundrum in that a total of 74 municipally-owned roads require complete replacement in the immediate future. Costs for the project could range from $6 to 10 million dollars. In an effort to find every available dollar to pay for the new roads, the board also recently proposed a cessation of borrowing money from banks in the short-term. Such a move could potentially save St. Germain somewhere in the neighborhood of $75,000 per year in interest payments.

Foulks estimates the room-tax increase might dwarf that number.

“I know there are a lot of municipalities going to eight percent right now,” she said. “As a chamber, we wouldn’t be opposed to that. That’s an extra $500,000 of revenue.”

Christensen then asked Foulks for her assessment how a jump to the maximum of eight percent might be received by the chamber’s lodging-accommodations members.

“We just want to make sure that we stay competitive with our neighboring communities,” she answered. “So I think our biggest competitors are going to be the Eagle River and Minocqua areas.  Arbor Vitae, Woodruff, the town of Washington are all at five and a half percent. Eagle River proper is at four and a half. So as long as we stay somewhere in that range, I think that’s appropriate.”

“But we want to make sure we aren’t scaring our guests off, especially after so many homes changed hands at a higher price. Rates are really high. Our guests have really been sticker-shocked since COVID, so we’re thinking a smaller increase might be better.”

“I think we should just go for the eight percent,” Cooper said. “We get it done; we do it; and we don’t have to deal with it for a while.”

“Talking to the chamber, our main partner in room tax, is pretty easy,” Christensen said. “But all of those other people? There are other businesses that are not members of the chamber.”

“That’s why we have to have a public hearing,” Cooper said.

He then made a motion to raise the room-tax rate to eight percent, “With the change effective on October 1, 2025, pending public hearing.”

“Just so everybody knows, I’ll be voting no, just because of the date,” Christensen said after the motion was seconded and the board resumed discussion. “I won’t support the change with the date at that time.” 

“That was also my only hesitation,” added supervisor Kalisa Mortag.

Cooper’s motion and its second were amended to make the date of implementation January 1, 2026.

Following the public hearing, the board will revisit the matter to deliberate and put the matter to a final vote.

“I would think that everybody that is signed up for room tax should have a notice that goes out about the public hearing and the proposed changes,” Christensen instructed Treasurer Vogel. “That will cover all the chamber members, too.”

The motion passed unanimously and the board scheduled a public hearing for Monday, October 18 at 7 p.m. in the St. Germain Community Center.

“I would expect a lot of people are going to show up,” Foulks told the board regarding the hearing. “Especially a lot of the mom-and-pops. It’s almost doubling the room tax. I think a lot of people are going to have some concerns and want to know what that extra money is going to be used for.”