A legislative proposal designed to help pay for an event center in Eau Claire would boost sales taxes paid by city hotels, restaurants and taverns and is prompting opposition from those businesses, the author of the legislation said Thursday.
State Sen. Terry Moulton, R-town of Seymour, has proposed a bill that would give Eau Claire voters, via a referendum, the opportunity to establish a local exposition district, a move Moulton said is intended to help pay for the Sonnentag Event and Recreation Complex planned to be built along Menomonie Street near Carson Park.
“We are getting a lot of push-back on this from those businesses that would be affected,” Moulton said. “There are going to have to be some discussions with the (Wisconsin) restaurants association, the tavern league, and hotel and lodging folks so we can get this worked out.”
The measure would boost sales taxes at hotels by as much as 2 percent and would raise sales tax on food and beverages between 0.25 and 0.5 percent. Using state Department of Administration estimates, a 0.25 percent food and beverage tax would raise about $600,000 annually, and a 0.5 percent tax would be double that.
A 2 percent hotel tax increase would raise about $470,000 in added annual revenue. The city currently charges an 8 percent hotel room tax. That money is used to help fund Visit Eau Claire, Fairfax Park Pool and Hobbs Ice Center.
Higher sales taxes would mean higher costs for customers of hospitality-related businesses, Moulton said, prompting concerns by those business owners of losing some of those customers.
However, “those businesses would benefit by having an exposition center in Eau Claire,” Moulton said.
The proposed legislation doesn’t spell out that money raised by added sales taxes, if approved, would go toward an exposition center. It could create a special purpose exposition district for another project.
But Moulton and other supporters said the measure is intended specifically for the Sonnentag center. That facility could include a 130,000-square-foot major event center; a recreation center shared by UW-Eau Claire, Mayo Clinic Health System and the Eau Claire YMCA; and private development at the site that could include a hotel. Tentative plans call for some development on the project by 2020.
“This is an attempt to find a way to help raise money for the exposition center,” Moulton said. “The idea is to try to find a way to help make this project happen.”
Linda John, executive director of the tourism promotions group Visit Eau Claire, said her organization wants to ensure those businesses that would be charged a higher sales tax would go toward businesses paying higher taxes. She said Visit Eau Claire is seeking language changes to the bill that would better spell that out. The organization’s board of directors is scheduled to vote on the proposal Wednesday.
“Our concern is that we make sure the benefit of whatever project is chosen is tied directly to those businesses that are paying the added tax,” John said. “We need to know they are going to benefit from whatever project this (tax money) goes to.”
While raising the hotel tax by 2 percent could mean added revenue, it could reduce hotel business, John said, because the 10 percent room tax that would be charged for hotel stays “is more expensive than a lot of places.”
Moulton’s proposal also is sponsored by state senators Kathleen Vinehout, D-Alma, and Janet Bewley, D-Ashland. The measure has garnered bipartisan backing in the Assembly as well, where local legislators such as Warren Petryk, R-town of Pleasant Valley, Kathy Bernier, R-Lake Hallie, and Dana Wachs, D-Eau Claire, are supporters.
David Minor, president and CEO of the Eau Claire Area Chamber of Commerce, said he hopes support from both parties will enable the measure to gain approval before the end of the current legislative session, which ends at the end of this month. The Assembly and Senate won’t reconvene until January.
“It will be a rush to try to try to fit it in, but we will try,” Moulton said.
Minor acknowledged opposition to the proposed legislation and said multiple steps must occur before the sales tax proposal could happen. It would have to receive legislative approval. The Eau Claire City Council would have to approve the sales tax increases. And a majority of city voters would have to approve the tax increases in a referendum.
The proposed legislation would apply to Eau Claire and Superior, which has tried for several years to start an exposition district to jump-start its struggling economy.
Minor said he met with Moulton at the end of December to propose the funding initiative for the Sonnentag center. Before starting work last year in Eau Claire, Minor worked as president and CEO of the Superior-Douglas County Area Chamber of Commerce since 1996 and was familiar with attempts to start an exposition district there. He saw combining that effort with the Sonnentag center as an opportunity.
“This simply puts Eau Claire at the table to begin talking about this idea,” Minor said.