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Legislative leaders eye 6 percent lodging tax

UPDATE: Saturday morning, the committee considered a new version of the lodging tax bill, which would set a statewide lodging tax at 4 percent. The measure splits the revenue evenly between local governments and the Wyoming Office of Tourism. Senate President Eli Bebout (R-Riverton) postponed a vote on the bill until Tuesday night. The delay gives time to the Legislative Service Office to address concerns about the revenue distribution formula to counties and gives the travel industry lobby more time to gather input from its members.

The Legislature’s Management Council will consider a statewide lodging tax of 6 percent at a meeting Saturday, just days before the budget session convenes, according to an agenda posted to the Legislative Service Office website.

The bill draft posted online Tuesday night does not estimate how much revenue the tax would generate. Senate President Eli Bebout (R-Riverton), requested the bill. He told WyoFile it could raise more than $38 million per year.

The bill is an effort to broaden the state’s tax base and reduce its dependence on the mineral industry, he said. “It’s a compromise, it’s broadening, it’s conservative guys like me trying to step up,” Bebout said.

The bill would direct 67 percent of the new revenue to the Wyoming Office of Tourism to promote travel in the state. The remainder would be distributed to local governments — counties, cities and towns. The money to local governments would be distributed based on the percentage of the lodging tax revenue that each county collected.

Lodging industry interests oppose the bill as drafted.

The new bill draft comes on the heels of the Joint Revenue Committee’s rejection of most of the major tax proposals it has considered over the past seven months. Those proposals included a tourism and leisure tax that was supported by hoteliers, the Wyoming Office of Tourism and a trade association for the travel industry.

The Management Council includes leading lawmakers from both chambers and political parties. It’s endorsement of a bill carries considerable weight.

Chris Brown, director of the Wyoming Lodging & Restaurant Association, said he plans to oppose the bill.

Members of his trade association worry that in some counties the new tax would add on to existing taxes and make room sales uncompetitive, he said. In Laramie County, for example, the 6 percent lodging tax would come on top of the state’s 4 percent sales tax, locally imposed sales taxes of 2 percent, and a 4 percent local option lodging tax. The total tax on a room sale would then be 16 percent, above regional and national averages, Brown said.

Local governments can impose local lodging taxes if approved by voters, and local lodging tax boards use the money to promote visitation to their region. In Teton County, a portion of the tax is diverted by law to offset impacts created by visitors. Local-option lodging taxes have to be voted on every four years. Brown said voters may not renew them if they know there is to be an extra 6 percent tax on top.

At the same time, unlike the bill that industry representatives put forward, there is no guarantee the money raised by the statewide lodging tax would be directed to promoting tourism. The bill’s language offers lawmakers ways out from that commitment, he said.

Jim Waldrop, general manager of the Wort Hotel in Jackson, said the proposed statewide tax must generate sustainable funding for the state Office of Tourism as well as revenues to replace those being spent by local lodging tax boards. Otherwise the measure “would be pretty much unilaterally unacceptable to our lodging industry.” Waldrop also serves as vice chairman of the Wyoming Tourism Board, the citizen panel that oversees the Office of Tourism.

In Teton County, the optional lodging tax will be up for renewal on the 2018 ballot. The statewide tax “could potentially put our lodging tax in jeopardy,” Waldrop said.

Hoteliers want to work with the Legislature to craft a tax that is acceptable to the industry, Brown said, but this bill is not well thought out. “We don’t think that knee-jerking a statewide lodging tax days before the session is the answer,” he said.  

The bill appropriates a third of the money raised to local governments to help them promote their own destinations, Bebout said. It may not specifically earmark the revenue for the Office of Tourism, but it would help to fund promotion, he said.

“Everybody’s going to have problems with it,” he said. “Maybe we can find a compromise, maybe not.”

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The original legislation proposed by the industry failed to gain the Revenue Committee’s endorsement on a tie vote. It would have placed an extra 1 percent sales tax on business categories related to leisure — including the arts, recreation and food and bar services. That tax was originally estimated to raise around $25 million for the state every two years.

Critics said it funded the travel industry’s promotion on the backs of Wyoming residents out for a beer or a meal, even in areas where tourism doesn’t play a role in the local economy. Some lawmakers view a statewide lodging tax, however, as one that would cost out-of-state visitors far more than residents.

Bebout was one of those who voiced skepticism of the tourism and leisure tax bill. Both he and Speaker of the House Steve Harshman (R-Casper) have expressed interest in a lodging tax at various points in the last seven months.

Harshman saw the bill when it went online last night, he told WyoFile. “I think it needs some work,” he said, but “I think we should talk about it, absolutely.”

A day after its release, he already was receiving emails opposing the bill, he said. “We’ve got to have the conversation anyway.” A lodging tax gains 85 percent of its revenue from out of staters, he said.

In 2017, there were 27 states with lodging taxes, according to a chart by the National Conference of State Legislature’s. Puerto Rico and the Virgin Islands also impose lodging taxes.

 

Angus M. Thuermer Jr. contributed to this report.

This story has been updated to reflect comments from Speaker of the House Steve Harshman and Senate President Eli Bebout. Both contacted WyoFile after its initial publication. -Ed.

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Andrew Graham is reporting for WyoFile from Laramie. He covers state government, energy and the economy. Reach him at 443-848-8756 or at [email protected], follow him @AndrewGraham88

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2 Responses to Legislative leaders eye 6 percent lodging tax

  1. Damon Jensen February 9, 2018 at 7:41 am #

    I support Senators Bebout’s plan. Tourism advertising, if we see this as a core government function, should be paid for by the tourism industry/hotels.

    I appreciate the Joint Revenue Committee having the intelligence to reject the disguised tourism industries original request to “tax itself.” They were doing what every special interest group does, lobbying to externalize their costs to society. They asked for a broad tax so local restaurants catering to non tourists would have to fund advertising which benefits them. Adam Smith noted the phenomenon of lobbyists functioning to externalizing costs back in the 1700’s.

    Thank heavens we have a legislature smart enough to see past these shenanigans!

    I also agree with Mr. Vanderhoff that Keynesian economics is ridiculous. “Spending to increase volume of that which it taxes to create more volume” sums up the failed logic of Keynesian economics. The money government uses to stimulate demand by definition has to come from somewhere which reduces the ability of the private sector to generate demand.

    Afton, Wyoming

  2. Dewey Vanderhoff February 8, 2018 at 12:37 pm #

    It’s what Bebout and his Merry Men are NOT saying about this statewide bed tax that I find interesting. The Unspoken Belief that it is a tax aimed primarily at out of state folks once they are captive inside Wyoming in search of a room. Or put another way, a tax that raises substantial income but is not paid by Wyoming residents .( I’m guessing the intra-state domestic lodging numbers are a fraction of their extra-Wyoming lodging buyers , i.e Tourons ).

    For that and the other reasons listed in the article , this proposal is a bad idea as presented here. As is the fundamental basis for the Lodging Tax itself: a tax designed to create more tax by increasing the volume of that which it taxes…

    Cody, Wyoming

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