Council to Review Room Tax Ordinance

Kimberly Wethal, Editor-in-Chief

The City of Whitewater, the Common Council, and the Whitewater Tourism Council want to put more “heads in beds” in hotels and motels, but those heads will soon be paying more to be there.

And short-term lodging services such as Airbnb might not be able to ditch room taxes anymore after the city and the Council review – and potentially amend – the room tax ordinance.

The 2018 city budget incorporated a raise in the room tax, increasing the percentage of the initial purchase from 5 percent to 8 percent. The budget was passed unanimously by the Council in November 2017.

The room tax increase is set to take effect on April 1, increasing for the first time since the City of Whitewater enacted the room tax ordinance in 1999.

Pursuant to Wisconsin state law, funds generated from the room tax are to be split up 70-30 between a municipality’s tourism entity and the city’s general fund, respectively. Any funding given to a tourism entity must be spent on promoting tourism and development.

Kathleen Fleming, president of the Tourism Council, acknowledged at a Jan. 16 Council meeting that an increase in the room tax rate was not something that the organization asked for. Instead, she said, the increase is being driven by the city’s desire to increase the revenue coming into their general fund.

“This increase was a conversation that Steve brought to my attention as something the city was doing to increase their revenue as little bits and pieces here and there to make up the difference that the city was in need of. This isn’t something that the tourism council particularly had any knowledge of or was specifically asking for,” Fleming said. “It was something to help out the city. If there was an increase, we certainly could come up with more creative, broader-reaching types of things we could do to reach a broader base.”

The city will also seek to modernize the very ordinance that allows them to collect room taxes on hotels and motels. The conversation surrounding updating the room tax ordinance and how the funds collected from the tax are recorded and spent was requested by Ald. James Allen (At-large) at a Nov. 21 Council meeting.

Steve Hatton, financial director for the City of Whitewater, said it wouldn’t be a complete rewrite, but any revisions would update the original legislation that dates back to its inception almost two decades prior.

A potential revision to the ordinance may add language that would require patrons who use services like Airbnb to also pay a room tax.

Allen also suggested that as the ordinance is revised, the Council should also look at how the tourism council is funded, and if the revenue collected from the room tax is being spent effectively.

“Before we start rewriting ordinances, I think we as a council should have a discussion on what we’re doing with the tourism council and what the city is doing with its 30 percent, what the tourism council does with that 70 percent and where we want to go forward,” Allen said.

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