CHEYENNE – Wyoming’s Senate president is opposed to increasing the sales taxes on businesses that benefit from tourism, favoring instead a statewide lodging tax to pay for tourism promotion.
The Wyoming Legislature’s Joint Revenue Committee met in Cheyenne on Monday and Tuesday to discuss a number of revenue-raising measures and savings diversions to meet hundreds of millions of dollars in budgetary shortfalls. While the original idea was for the committee to vote up or down on a variety of tax increases, co-chairmen Rep. Mike Madden, R-Buffalo, and Sen. Ray Peterson, R-Cowley, decided instead to vote on most of the proposals during a special meeting Jan. 31.
The idea behind the change was the Wyoming Legislature’s Select Committee on School Finance Recalibration’s report in coming weeks could identify cost-saving measures.
Updated revenue projections coming in January could also show a more optimistic picture than previously thought. The chairmen said both could provide information that would be critical to making decisions on new tax measures.
Along with the big-ticket property and sales tax options being considered, lawmakers punted on a leisure and hospitality tax proposal. The draft bill would impose a 1 percent excise tax on the sale of tourism activities within the state.
A tourism activity is defined in the proposed legislation as a sale by any vendor in the North American Industry Classification System (NAICS), regarded as arts, entertainment and recreation, as well as accommodation and food service. This would include promoters of performing arts and sports, museums, historical sites, RV parks, full-service restaurants and bars.
Advocates for the tax say it’s meant to establish long-term sustainable funding for promoting tourism within the state. More money would be available for services with the Wyoming Office of Tourism allocation off the state’s general fund. It would also provide a more sustainable funding structure for tourism promotion, as its general fund allocation can go up and down with the state’s booms and busts.
Budget reductions in the past two legislative sessions resulted in a 13.5 percent budget cut to the Office of Tourism, putting Wyoming behind competing states with dedicated funding sources, such as Montana, Utah and Colorado.
During the Revenue Committee’s November and December meetings, many restaurant and lodging business owners spoke in favor of the leisure and hospitality tax. However, some in Wyoming are concerned that while businesses in areas that attract tourists would benefit in the long term from the tax, small-town bars and restaurants that cater mostly to locals would be paying as well.
For Senate President Eli Bebout, R-Riverton, it’s a good idea to find a way to take the Office of Tourism off the general fund. But he said the leisure and hospitality tax as it stands now would affect more Wyoming residents than a statewide lodging tax.
Bebout has repeatedly said during the interim that he’s generally opposed to tax increases, especially until he sees meaningful spending reductions.
“Right now, a lot of people in Wyoming are going through tough times, and every little bit hurts the men and women of this state,” Bebout said. “(The leisure and hospitality tax) would hurt.”
State law allows communities to implement a lodging tax up to 4 percent to promote local tourism activities. It applies to all establishments providing sleeping accommodations, with an exception for those who stay more than 30 days. All 23 Wyoming counties have either a city- or county-wide lodging tax.
Chris Brown, executive director of the Wyoming Travel Industry Coalition and the Wyoming Lodging and Restaurant Association, has worked with the Office of Tourism in developing and lobbying for the leisure and hospitality tax. He said he’s open to discussions related to Bebout’s idea, but he is currently opposed to a statewide lodging tax.
Putting the burden of funding tourism on the lodging sector doesn’t seem fair, as many kinds of businesses benefit from tourism, Brown said.
“The comprehensive approach we’ve taken is not only more fair, spreading it around leisure and hospitality (businesses), but it also generates more revenue at a lower rate,” he said.
Additionally, Brown said he’s worried a statewide tax could threaten the local option currently in place.
“That’s a real concern I hear from our members across the state,” he said.
The Wyoming Taxpayers Association hasn’t taken a formal position on the leisure and hospitality tax proposal, said Buck McVeigh, executive director. But members have expressed concerns.
“We historically know what portion of the state benefits the most when it comes to tourism, that being our northwest sector,” he said. “So the argument was made that the person sitting in Fred’s Bar in the northeast section of the state that receives very little tourism will be paying for the counties that benefit the most from tourism.”
McVeigh said the legislation is a work in progress, but he thinks a statewide lodging tax is probably a more palatable solution for his organization.
Under the state’s 4 percent sales tax, the businesses that would fall into the leisure and hospitality tax generated just less than $71.5 million in fiscal year 2017. With an additional 1 percent, the Office of Tourism estimates an additional $17.87 million could have been generated.
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