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June 11, 2013 | 03:57 PMLake Geneva is looking longingly at something called the premier resort area tax, a sales tax permitted to tourist communities that either meet state guidelines or get special permission from the state Legislature.
It's partly a matter of esteem and partly a matter of revenues.
Although near the epicenter of the tourism business that has Walworth County ranking sixth in the state in generating tourism dollars, Lake Geneva doesn't qualify for the tax under state law, and its local state lawmakers seem reluctant to recommend the city to the state Legislature for consideration.
The tax is probably unknown to most state residents. That's because only six communities in Wisconsin are allowed to collect the tax and only four of them do.
Mayor Jim Connors wrote a letter to Gov. Scott Walker asking for his assistance in getting Lake Geneva on the premier resort tax list.
The premier resort sales tax is now either a half percent, as it is in the cities of Bayfield and Eagle River, or 1 percent as in the village of Lake Delton and the city of Wisconsin Dells.
Lake Delton and the Dells were allowed to increase their resort sales taxes by special dispensation of the state Legislature. A proposed amendment now being considered would allow those two communities to bump the tax up to 1.25 percent, provided voters approve the increase.
The villages of Ephraim and Sister Bay may adopt the tax, but have opted not to.
Created in the late 1990s to help tourist venues pay for infrastructure and to maintain an appearance attractive to tourist dollars, the sales tax applies to certain retail businesses that the state Department of Revenue has determined benefit and benefit from tourism.
City Administrator Dennis Jordan said the half-percent sales tax could generate an additional $500,000 to $600,000 for the city, while 1 percent might bring in $1 million or more. However, with only six communities currently qualifying for the premier resort tax, one might assume it's tough to get on the list. That assumption would not be incorrect.
In his letter to Walker, Connors admits he and city council members find it frustrating that a city as "touristy" as Lake Geneva doesn't qualify for the premier resort tax outright.
By state law, 40 percent of a community's assessed valuation must be in tourism-related retail businesses for that community to immediately qualify for the tax.
Only two communities have ever qualified under state law. Lake Delton and Wisconsin Dells, which both qualified in 1998.
According to Connors, the closest Lake Geneva came to qualifying was in 2006, when a review of the city's businesses found 34.6 percent of its assessed valuation was involved in tourism retail.
Increases in assessments, primarily in residential, over the next two years, dropped that percentage to 26 percent.
However, there is another way to get on the premier resort tax list. A local state representative or state senator may sponsor special legislation to make that happen.
That process is how Bayfield, Eagle River, Ephraim and Sister Bay also got on the premier resort tax list.
However, according to the state DOR website, before a community can collect the tax, the community's electors must approve the tax by referendum.
Bayfield enacted the premier resort tax in January 2003, and Eagle River enacted its tax in October 2006.
If Lake Geneva were to be on the list, it would have to put the issue up to the voters in a special referendum. By law, the voters have the final say on whether the tax will be enacted, Jordan said.
However, State Rep. Tyler August (R-Lake Geneva) and State Sen. Neal Kedzie (R-LaGrange) are reluctant to do so.
"The city of Lake Geneva has contacted our senate and house representatives to sponsor such legislation for our city, but they have declined because they believe it is a tax, and they do not want to be responsible for raising a tax," Connors wrote in his letter to the governor.
"The mayor and I sat down with Kedzie for 40 minutes last week," Jordan said in a June 7 phone interview. "I haven't heard anything, yet."
Because the tax can only be enacted by the voters, Connors wrote, he didn't see how approval of the new sales tax would reflect negatively on the local legislators.
The tight economy and levy cap placed on municipalities makes it difficult for the city to make itself special in comparison with other tourist destinations.