Under the room tax law, does a tourism commission have any discretion with regard to spending room tax revenue the municipality has forwarded to it for tourism promotion and tourism development or must the commission forward all of the room tax dollars it receives to a tourism entity or other organization performing the functions of a tourism entity? 

While the room tax law is confusingly written and recent changes have not added clarity, a tourism commission has some discretion on how to spend the room tax revenue it receives from the city for tourism promotion and tourism development.

Under the room tax law municipalities have always had the option of creating a tourism commission to oversee the spending of room taxes collected by the municipality. 2015 Act 55 requires municipalities, beginning January 1, 2017, to forward the 70 percent of room tax revenue required to be spent on tourism promotion and tourism development to a tourism entity or a tourism commission. Under prior law, municipalities had the option of forwarding room tax revenues to tourism entities or tourism commissions, but were not required to do so.

The four provisions in the room tax law relevant to your question are set out below:

Sec. 66.0615(1m)(b)1. provides that “If a single municipality imposes a room tax under par. (a), the municipality may create a commission under par. (c). The commission shall contract with another organization to perform the functions of a tourism entity if no tourism entity exists in that municipality.”

Sec. 66.0615(1m)(d)3. states that “A commission shall use the room tax revenue that it receives from a municipality for tourism promotion and tourism development in the zone or in the municipality.”

Sec. 66.0615(1)(fm) defines “tourism promotion and tourism development” to mean:
“any of the following that are significantly used by transient tourists and reasonably likely to generate paid overnight stays at more than one establishment on which a tax under sub. (1m) (a) may be imposed, that are owned by different persons and located within a municipality in which a tax under this section is in effect; or, if the municipality has only one such establishment, reasonably likely to generate paid overnight stays in that establishment:
1. Marketing projects, including advertising media buys, creation and distribution of printed or electronic promotional tourist materials, or efforts to recruit conventions, sporting events, or motorcoach groups.
2. Transient tourist informational services.
3. Tangible municipal development, including a convention center.”

Sec. 66.0615((1m)(f) provides that “the commission may not use any of the room tax revenue to construct or develop a lodging facility.”

When read together these provisions state that a commission must use room tax revenue for tourism promotion and tourism development and must contract with a tourism entity or, if none exists, another organization to market the community to tourists and travelers. A commission may spend room tax revenue on marketing, tourist information services, and “tangible municipal development” that is used by transient tourists and is reasonably likely to generate paid overnight stays at lodging establishments in the community. A commission is expressly prohibited from using room tax revenue to construct a lodging facility.

The room tax law is silent as to whether the commission must forward all or any room tax revenue to the tourism entity or other organization that the commission contracts with for destination marketing services. Indeed, the provisions quoted above indicate that the commission has some choices. The commission may choose to spend room tax revenue on tangible municipal development, including a convention center, but not a lodging facility.

While a tourism commission must contract with a tourism entity or other organization to market the community to tourists, it need not forward all or any of the room tax revenue it receives from the municipality to such establishments. A tourism commission has the option of using some or all of the room tax revenue it receives on “tangible municipal development” to be used by tourists and reasonably likely to generate paid overnight stays in local lodging establishments.