The state Joint Finance Committee has finally completed its work on the State Budget, officially sending it to both the state Senate and Assembly for their modifications, and negotiations to jointly agree to a final version that then goes to the Governor, where he has the authority to veto lines in the proposal, but not add anything new. With the Governor scheduled to announce his candidacy for President next Monday, it is hopeful that both houses and the Governor will complete their work yet this week.

Joint Finance Committee finished its action around midnight Thursday night, deciding to pull the arena proposal and prevailing wage package consideration out of the Budget and into separate legislation.

The following is an important call to action that is needed within the next 48 hours, along with additional updates!

Room Tax Reform (and Call to Action!)   While Joint Finance had approved the Room Tax Reform package just over a month ago, we had been waiting for a technical correction to one component that was accidentally included by the drafter in the original motion. The original motion accidentally included an exception to the new dollar caps for those municipalities that keep more than 30 percent for their own purposes by stating those not subject to the 8 percent maximum room tax limit (i.e. areas with municipal convention center debt) would not need to follow the dollar caps. While this would not be an issue for those currently exceeding the 8 percent room tax because of remaining convention center debt, it was seen as a potential loophole for municipalities that keep more than 30 percent that may decide to build a convention center, so the language was removed.

In addition to the above technical correction approved as part of an Omnibus Motion last Thursday, there was another change to the room tax reform package. Municipalities currently retaining more than 30 percent of room tax revenue for their own purposes that had already entered into a contract prior to January 1, 2015, for expenditures funded by room tax revenue, could continue to honor their contract, as the new dollar caps would not apply. Conditions include that this is only for the duration of the contract, that the dollar caps would immediately apply once the contract is completed, and that room tax revenue beyond the cap must be necessary in order to satisfy the terms of the contract. For reference here is the summary of the full Room Tax Reform package motion approved by the Committee. The Joint Finance Committee's proposed statutory language changes relating to Room Tax Reform has been isolated by WH&LA herefor those interested.

We have learned that the League of Municipalities, led by a few key cities, will be strongly asking the Governor to veto the Room Tax Reform package in whole or in part.

WH&LA Call to Action:

We need as many members as possible to contact Governor Walker (govgeneral@wisconsin.gov) and ask him to support the entire Room Tax Reform package passed by Joint Finance Committee to help fix Wisconsin's Room Tax statute to help to ensure that the majority of Room Tax collected from our guests is used to help to grow Local Tourism, which was the original intent of Room Tax when it was created. Your help is needed by this Thursday morning!!

Please do your part to help us to finally get room tax in our state going in the right direction to help grow tourism!  

Milwaukee Arena Plan

Yesterday, although already done with their state budget proposal, Joint Finance Committee held a public hearing with invited speakers such as Milwaukee Mayor Barrett, Milwaukee County Executive Abele, DOA Secretary Neitzel, and representatives from the Legislative Fiscal Bureau and Department of Revenue, to allow the Committee the chance to publicly question each on components of the arena funding proposal. With extensive questioning throughout the five-hour hearing, the proposal will now be voted on in an Executive Session of the Joint Survey Committee on Tax Exemptions this morning, before heading to both houses.

Tax Parity on the Sale of Overnight Stays

This proposal to require Online Travel Companies (OTCs) to collect and pay state and county sales tax and room tax based on the price they charge their customers for the overnight stay (retail rate) instead of the amount they pay to the lodging property (wholesale rate) was being considered by Joint Finance Committee as a way to generate more state revenue for the state budget; however, with this consideration coming at the very end of the process and the loud opposition from the national OTC organization Travel Tech, it was not included in the Budget Proposal. This does not mean that it cannot come back later in session as a stand alone bill, but under the tight timing along with the lack of support for anything that remotely appeared to be a new tax, it did not have a chance within this budget. Late last week Rhode Island passed this in their state budget, and it is likely that other states will slowly but surely succeed in the Tax Parity evolution, but it was not Wisconsin's time.

Further Changes to the Tourism Budget

Last Thursday within its final Budget Modification motion (sometimes referred to as the 999), Joint Finance Committee offset the challenge they had created by previously adding a $500,000 earmark to the Tourism Budget for creation and promotion of the Frank Lloyd Wright Heritage Trail that committed Tourism's limited budgetary resources. The Committee approved on the final day an additional $500,000 in GPR funding to fund this earmark, which in essence amounts to a modest overall increase in the Tourism budget for the next two years. Additional clarifications were added on this project. You can view the Legislative Fiscal Bureau's Comparative Summary of the Tourism Budget. This added funding was primarily pursued by Assembly Tourism Committee Chair Rep. Travis Tranel, and opposition to this added funding is not predicted from either house nor the Governor at this time.

Added DOA Auditor Positions

Also on Thursday in the Omnibus Motion, Joint Finance approved the Governor's recommendation to add 102 positions in the Department of Revenue for new auditors to increase auditing activity and improve tax collections." This basically means there will be a considerably increased focus on DOR audits and pressure to generate more tax revenue for the state (also budgeted).

Retail Alcoholic Beverage License Modifications

A municipality that has reached its Class B license quota would be able to pay a $10,000 license transfer fee to a contiguous municipality that has not reached its quota for the privilege of adding additional licenses. Also approved on Thursday was deletion of a current provision that allows municipalities that have reached their quotas to issue a Class B license to a full-service restaurant that has a seating capacity of at least 300 persons.

Rhinelander added as Premier Resort Area

The city of Rhinelander would be given an exemption from the current eligibility requirements for imposing a Premier Resort Area Tax; however, the city would still need to adopt a resolution to authorize this, and they could only utilize the new tax revenue on transportation-related infrastructure, and the city would need to match these expenditures also on transportation-related infrastructure each year.