A bigger hotel tax to fund KRM? realracine objects

The Legislature has hit Dave Blank's hot button -- hard! -- by proposing that Racine County could fund the Regional Transit Authority with an additional 8 percent hotel room tax. On top of the 8% room tax we already have, which itself is on top of the 5.1% general sales tax. Adding up to a tax of 21.1%.

All to fund the RTA, and KRM commuter rail and better bus service.

The operative word here is "could." The Legislature also suggested three alternative funding methods for RTA: a wheel tax, a half-percent sales tax or a municipal membership fee.

Those three alternatives, of course, share a major flaw in legislators' and local officials' eyes: one way or another they impose a cost on local residents -- um, the voters they depend upon for re-election. Whereas a hotel tax, for the most part, takes the money from the pockets of business travellers -- visitors who do not vote in local elections. (See, tax, rental cars, for more on this approach.)

Maybe for that reason, all Blank sees is the hotel tax, which, if imposed, would raise Racine County's hotel tax to 21.1 percent, highest in the country. Blank, CEO of the Racine County Convention and Visitors Bureau -- now known by its new lower case moniker, realracine -- points out that the hotel tax proposal, if adopted, "would hurt our chances to attract more visitors." Even without an additional tax, county room rentals were down in 4% in 2009.

realracine's newsletter notes that a 21.1% hotel tax would add $7 more (on a room costing $100) to the bill than a room in, say, Milwaukee or Lake Geneva. "The Board of Directors of realracine opposes the inclusion of the hotel room tax to help fund the RTA. We do not want to slam the hotel door on business travelers and tourists who can find lodging in Lake Geneva, Milwaukee County or Lake County, Illinois, at 7 per cent less! We need people, for business and pleasure, to come to Racine County, spend money visiting and enjoying our county, including staying in our hotels and motels."

The existing 8% hotel tax primarily funds the RCCVB... um, realracine, whose mission is to attract more visitors "who spend money throughout the community and therefore replenish the fund," realracine says. "Funding mass transit will not do this."

Ouch! It's that last statement, I think, that gets RTA proponents' knickers in a knot, although as we all know, money is the root of most disputes. (And realracine supports KRM, so go figger.)

State Sen. John Lehman told the Journal Times that Blank is over-reacting. And Kerry Thomas, executive director of Transit Now, pointed out that the choice of which alternative to impose is up to local decision-makers. The sales tax would require a referendum; the others could be enacted by local government.

Blank told us, "We would prefer not to see a room tax as an option at all. In the grand scheme of things it can only be a small part of the funding." Neither legislators nor Transit Now should have been surprised by realracine's position: tourism officials, who have been following the proposal since October, told them of their opposition early in December.

One statement in the JT's story really caught my eye. "Lehman pointed out that Racine County could raise more than enough for an RTA and commuter rail by using a tool it already has: the right to add a 0.5 percent sales tax."

WHAAA??? Wasn't Lehman the lawmaker who most forcefully opposed a county sales tax this summer, when the Legislature's Joint Finance Committee, on which he is the ranking Democrat, was trying to fund the RTA, finally coming up with a $16 car rental tax? Yes. See here. Didn't help that that deal was a middle-of-the-night compromise ... much like the middle-of-the-night sell-out giveaway that saddled Racine County with a piece of the stadium tax forever, costing George Petak the very same Senate seat that Lehman now occupies.

Just for reference-sake, here are the room taxes imposed by other communities, as supplied by realracine:

Kenosha County 21.5% (proposed) -ouch
Racine County 21.1% (proposed) –ouch!
Indianapolis 16%
San Francisco 15.58%
Chicago 15.4%
Cleveland 15.25%
Philadelphia 15.2%
New York 14.75%
Milwaukee 14.6%
Washington 14.5%
Boston 14.45%
Baltimore 13.5%
Las Vegas 12%
Source: Boston’s Office of Budget Management, July 2009