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Lodging Tax

New Tax On Lodging Coming To Wyoming In 2021

in Column/CJ Baker
State Capitol
3325

By CJ Baker, Powell Tribune

Starting next year, Wyoming will begin assessing a new 5% tax on overnight stays at hotels, motels, RV parks, campgrounds, guest ranches, Airbnbs and other lodging facilities around the state.

The statewide lodging tax passed the Wyoming Legislature March 2 — surviving a narrow vote in the Senate — and was signed into law by Gov. Mark Gordon on Friday.

Of the new tax, 3% will go to the state government to fund the Wyoming Office of Tourism, which promotes the state as a destination for visitors across the globe; the other 2% will stay in the county where it’s collected to boost local tourism. Counties will have the option to seek another 2% for local tourism efforts — such as the Park County Travel Council — for a maximum total lodging tax of 7% (with 3% going to the state and 4% to the county).

Claudia Wade, the travel council’s executive director, said the marketing and promotions that currently are and will be funded by lodging taxes are needed to draw tourists.

“I think tourism is important to this state given the situation with our oil and gas and it is a very strong second industry in Wyoming,” Wade said. “And we need to keep promoting Wyoming and Cody needs to keep promoting this East Entrance as well as all of the other things Park County has to offer.”

Park County voters have long imposed a 4% tax on lodging to fund the travel council’s marketing efforts. This November, they’ll be asked to keep that funding intact, by approving an additional 2% local tax on top of the mandatory 5%.

Particularly given the impacts that the new coronavirus is expected to have on global travel — and with the state and county constantly competing for tourists with other communities around Yellowstone National Park — “I think that we’re going to need this [lodging tax] as much as we ever have had to,” Wade said.

Even if Park County voters approved an additional 1% sales tax, bringing the combined tax on lodging to 12%, it would still be below average for the country, Wade said.

The new statewide lodging tax passed the Senate by a 16-13 vote and the House by a 47-13 margin.

Park County lawmakers backed House Bill 134 by a 5-3 margin: Sen. R.J. Kost, R-Powell, Sen. Hank Coe, R-Cody, Rep. David Northrup, R-Powell, Rep. Sandy Newsome, R-Cody, and Rep. Jamie Flitner, R-Greybull, all supported the measure while Rep. Dan Laursen, R-Powell, Rep. John Winter, R-Thermopolis, and Sen. Wyatt Agar, R-Thermopolis, each voted no.

Sen. Coe was a vocal backer of HB 134 when it came up for final approval on Feb. 28. He cited tourism industry research indicating that 85% of the tax will be paid for by out-of-state tourists and that the hike in taxes will not depress visits.

“Lodging tax does not prohibit somebody from making a decision to visit a state. That’s just the bottom line,” Coe said on the Senate floor.

He also read aloud a column from Lander journalist and businessman Bill Sniffin, who argued lawmakers would be foolish to not provide more support to its growing tourism industry. Sniffin wrote in his piece that “there truly is no place [in Wyoming] that does not benefit from the visitor.”

“A small amount of money spent with the state tourism department generates much more money — it is as simple as that. The more people we get here the more money they spend,” Sniffin argued, adding later, “If this is the one area of state government that is making money, why not spend even more and make even more money?”

According to industry figures, tourism employs roughly 31,000 people in the state.

“We need this in the future of Wyoming,” said Sen. Jim Anderson, R-Casper. “If you look out 10 or 20 years, this could possibly be our No. 1 industry.”

While the bill had the backing of the Wyoming Lodging & Restaurant Association and the Wyoming Travel Industry Coalition, the two hoteliers in the Senate — Democrat Lisa Anselmi-Dalton of Rock Springs and Republican Cale Case — both opposed it.

Sen. Case said the guests at his Lander establishment include far more Wyoming residents than claimed and he called the estimated impact of the tourism office’s efforts “way overblown” with “exaggerated claims about the success of the programs.”

“If you really dive into the expenditures … about out-of-state advertising firms and on and on and on, all to bring more people to an area that’s really suffering from the overcapacity,” Case said, referring to Yellowstone National Park and Teton County’s “overheated” economy.

“You try to drive across Yellowstone? Have you just tried to go there and enjoy yourself?” he asked. “It’s hard to do.”

Sen. Dan Dockstader, R-Afton, echoed the concerns about Wyoming’s tourism efforts primarily benefiting the Jackson area.

“The rural areas of this state are being left out of the promotion, the help, all that goes with it,” Dockstader said. When he asks lodging businesses in his district if they feel a boost from the millions of dollars the state pours into tourism, the answer has been “essentially no,” Dockstader said.

Senate critics also contended that the majority of Wyoming residents opposed the tax, citing emails from parents who rack up nights on the road while tracking their children’s sporting events.

“Most of you are going to vote on the sides of the lobbyists,” Sen. Bo Biteman, R-Ranchester, told his colleagues. “I’m going to vote on the side of my people and the everyday citizen that can’t afford to drive down here and try to lobby you.”

Earlier, as the Senate debated an ultimately unsuccessful amendment that would have diverted 20% of the state’s share of the tax to K-12 education, Biteman noted it was likely to be the only tax the Legislature passes this year.

“… and it doesn’t go toward any of our structural [budget] problems,” he said, “it just goes to a private industry to promote themselves.”

However, Sen. Eli Bebout, R-Riverton, said the bill would help Wyoming’s efforts to broaden its tax base and diversify its economy.

A fiscal note attached to the legislation estimated that the 3% portion of the tax headed to state tourism efforts will raise roughly $18.6 million per year.

Statewide Lodging Tax Becomes Law

in News/politics
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A bill creating a statewide lodging tax was signed into law Friday by Gov. Mark Gordon, clearing the way for the tax to take effect Jan. 1.

House Bill 134 will impose a statewide 5 percent tax on the cost of hotel and motel rooms, with money raised by 3 percent of the tax, about $13 million a year, to be used by the state Office of Tourism to promote tourism in Wyoming.

Income from the remaining 2 percent will go to the state’s counties, where an additional 2 percent lodging tax could be imposed with voter approval.

Also signed into law on Friday was House Bill 5, which authorizes digital driver’s licenses.

The bills were signed as lawmakers wrapped up the fourth week of their budget session. The session is expected to end next week.

Bob Geha: Statewide Lodging Tax Wins House Approval

in News/Tourism/politics
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By Bob Geha, Cowboy State Daily

A measure that would impose a statewide 5 percent lodging tax on the cost of hotel and motel rooms won final approval Monday from the state House of Representatives.

House Bill 134 won approval in its final reading from the House on a vote of 39-19, sending it to the Senate for its review.

The bill would impose a 5 percent tax statewide, with 3 percent — about $13 million a year — going to the state Tourism Department for use in promoting Wyoming tourism.

Income from the remaining 2 percent would go to the state’s counties and another 2 percent tax could be imposed at the county level with voter approval.

Chris Brown of the Wyoming Restaurant and Lodging Association said the bill’s approval is a victory for tourism in Wyoming.

“By putting the state’s second largest (income) generator and the promoting arm of Wyoming on a more competitive footing, this is a win for outdoor recreation, it’s a win for tourism, it’s a win for the state,” he said.

Opponents argued voters might be hesitant to approve the extra 2 percent tax with the statewide tax in place.

“My Sublette County people were afraid of that,” said Rep. Albert Sommers, R-Pinedale. “They’re afraid that this bill could cause the voter to have a backlash and they may not be able to get their remaining 2 percent that’s (approved by) a vote of the people.”

A similar bill passed the House last year, but was killed in the Senate.

Lodging Tax: $21.5 Million Raised Statewide in 2019

in News/Taxes/Tourism
Lodging tax
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By Wendy Corr, Cowboy State Daily

Because of the importance of tourism to local economies throughout the state, many counties are making the most of an optional tax that allows them to lure visitors, bringing much-needed tourism dollars to sluggish economies.

According to the Wyoming Travel Industry Coalition, the local option lodging tax works well as a source of revenue for local tourism promotion. 

A report released by the state shows that more than $21.5 million dollars was raised by lodging taxes statewide in 2019. 

Income from the lodging tax, which is assessed in addition to sales taxes, is earmarked for local travel promotion. The tax, which ranges from 2 percent to 4 percent, must be approved by local voters every four years. 

None of the lodging tax revenues can be used for projects outside of tourism advertising and promotion — no capital construction, no general funding for cities, towns and counties. 

But for many local governments, that tax income is a jump-start for the economy.

Claudia Wade, executive director for the Park County Travel Council, said that because of the lodging tax, the council can spend more dollars advertising attractions and recreation, which influences travelers’ decisions to stay longer in the area.

Because of its location, Park County is a natural draw for tourists heading to Yellowstone National Park. 

Wade said that because of the advertising financed with lodging tax revenue, more people are drawn to the region as tourists, which then allows more locals to stay employed.

“Because the lodging tax is collected on top of the sales tax, when visitors come to the area, they bring in more revenue that can be used for general fund purposes for local governments,” Wade said.

“Those expenditures have a big impact on our economics. The businesses that they’re frequenting also are hiring employees — which means those front line workers and workers behind the scenes all benefit from the tourism industry and visitors coming to the area.”

What the lodging tax does in Park County is indicative of its impact across the rest of the state. Laramie County received more than $2 million in lodging tax revenue last year, while Casper and the local governments in Natrona County received $1.8 million.

Park County, with Yellowstone as a major tourism draw, took in more than $3 million, and Teton County received more than $7.7 million in lodging tax dollars.

Wyoming law specifies that the tax must be used for travel and tourism promotion by the county or city approving the tax, and is limited to promotional materials, television and radio advertising, printed advertising, promotion of tours and other specific tourism related objectives. 

Wade pointed out that Park County does what most other counties do with the funds.

“We pay for connect TV ads, some print, there is some digital, and a lot of social media,” she explained, “so it’s a big mix – much bigger than when it was when we initially started in 1986.” 

Brook Kaufman is CEO of Visit Casper. She said the lodging tax makes a huge difference in the local economy in Natrona County.

“I think there is a perception that Natrona County doesn’t have a robust tourism economy, but we do,” she said. “It employs just over 2,600 people, generates almost $300 million in direct spend and $15 million in sales tax. For us, tourism is really critical to employment.”

Kaufman said Visit Casper invests the lodging tax dollars in marketing programs that drive return visits, which creates jobs and sales tax collections for both cities and counties. 

A statewide lodging tax bill is being proposed again this year at the Wyoming legislature, which Wade said would assist not only the individual counties, but the entire state.

“The lodging tax is important as a whole to the state — that additional money could be very beneficial to the Wyoming Office of Tourism, which has a broader reach than our local organizations,” Wade explained.

The Wyoming Travel Industry Coalition reports that the lodging tax makes up about 18 percent of the tax dollars from travelers. While a study by the American Economics group in 2008 concluded high room taxes can influence travelers’ decisions to stay in a certain city for any length of time, Wade said that’s not much of a concern in Wyoming.

“Our lodging tax rate here in Wyoming is fairly insignificant compared to other regions,” she said, noting that states such as Michigan (at 12 percent) and Connecticut (at 15 percent) have significantly higher lodging taxes than in the Cowboy State. 

Only five states have lodging tax rates lower than Wyoming, according to a report issued by the National Council of State Legislatures.

Governor Gordon Will Support New Lodging Tax to Promote Tourism

in News/Tourism/politics
Photo by Walter Sprague, Newcastle Newsletter Journal
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Photo by Walter Sprague, Newcastle Newsletter Journal

By Bill Sniffin, Cowboy State Daily

“I can support it,” Governor Mark Gordon said when asked if he can get behind the concept of a statewide lodging tax to fund the future of tourism.

Gordon was addressing the members of the Wyoming Press Association during that group’s annual meeting in Casper.

“This is an important step for the tourism industry, and I support that industry,” he said.

Tourism is the state’s second largest industry behind energy production and has more employees, 33,000, than any other industry.

Photo by Walter Sprague, Newcastle Newsletter Journal

The new lodging tax proposal contains the following items:

• New title- Wyoming Tourism Account Funding.
• Joint Appropriations Committee sponsored bill
• Imposes a 5% statewide lodging tax (3% dedicated to tourism 2% guaranteed and replaces existing 2% local option lodging tax)
• Up to additional 2% local option lodging tax can be renewed every 4 years but would be vote of governing local government (city council or county commissioners depending if city or county wide tax) instead of vote of the electorate.
• State parks overnight camping would be subject to the tax (except annual resident camping passes, state fair campgrounds and county fair campgrounds- they would all be exempt)
• 80% of the 3% that is dedicated to tourism would be deposited into the newly created tourism account and shall be spent on Wyoming Office of Tourism/Wyoming Tourism Board (subject to legislative approval before spending every year)
• Remaining 20% would be deposited into newly created tourism reserve account. (Subject to legislative approval before spending every year) No more “tipping point”
• Local option lodging tax permissible expenditures amended to include “digital content, social media, staging of events, educational materials and other tourism related objectives including those identified as likely to facilitate tourism or enhance the visitor experience”
• The Bill, if passed, effective January 1, 2021
• Thresholds for when lodging tax shifts from 90/10 to 60/30/10 updated to 2020 dollar values (nothing changes, the thresholds have always been tied to the cost of living index and so thresholds are simply updated to what they are in 2020-they remain tied to index moving forward)
• All existing local option lodging taxes stay in place until their next scheduled election.

Peterson: How to fix Wyoming’s revenue struggles

in Government spending/Column/Taxes
Wyoming Government spending
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By R. Ray Peterson, guest column for Cowboy State Daily

While serving in the Wyoming Senate, I had the privilege of serving on both the Appropriations Committee for six years and as chairman of the Senate Revenue Committee for six years.  These two committees deal with the state budget through expenditures and revenues.

As I served, I was able to attend many state and regional meetings as well as review reports, and studies, all while having direct involvement in directing expenditures and revenue streams of our state.  These experiences allowed me insights and knowledge concerning our states budget along with growing concerns of revenue streams and how we will meet the expectations of funding state and local governments into the future.

The most recent developments of our coal industry in Wyoming should be setting off alarms with every elected official and citizen in our state.  Over the years, our state’s natural resources have subsidized a major portion of our taxes or revenue streams that we use to fund our schools and governments.  Over half of all revenues used to meet these expenses come from our mineral extraction industry. 

Learning from our history of our boom and bust cycles, our legislature has wisely put aside additional revenues from the high years to assist us during the low years.  This philosophy has served us well for the past 50 years in providing a more consistent budget, but the times, “they are a changing.”  The question now is, how long before our reserves are depleted?  Will our natural resources come back as they have in the past to save us yet another time? 

Wyoming, by our state’s constitution, must have a balanced budget.  Some would argue that we do not deficit spend in Wyoming while others would argue that we use the reserves to balance the budget which is, in a sense, deficit spending.  From my own simple understanding, when we spend more in a period than we take in, it is deficit spending. 

Although our budget is balanced in the end, we are still spending more than we take in during our low years.  Thanks to our cash reserves or “rainy day” funds and our investments, we seem to be holding our own while hoping that the revenue streams will return to higher levels. 

Today’s challenges are different

But today’s challenges to the budget are different than our past experiences of our boom and bust cycles.  Today, we face the strong possibility that coal will never come back to contribute to our revenues as it once did for our state.  The market has changed.  The demand has changed.  Unlike natural gas and oil, coal was a more consistent contributor to our states revenues with even slight increases from year to year, as amounts extracted increased with what the market demanded. 

But the demand for coal is decreasing for different reasons.  Although Wyoming has stepped up to produce cleaner burning coal technology to protect our coal’s value, other factors have weighed in that have had a dramatic effect on the value of coal. 

The war on coal was real and certainly had its effect.  More power plants have converted from coal fired to natural gas fired power generation.  But more importantly, consumer states of energy, such as California and others, have required energy supply companies to provide evidence that a majority of their power generation portfolio is derived from renewable sources such as hydro, wind and solar, or they will go elsewhere for their energy purchases.  The market is changing and because of this, Wyoming should be prepared and adapt with those changes.

Action is required

There are two principles used when budgeting in a shortfall.  Increase revenues or reduce expenditures.  Wyoming has done both without raising taxes. And there are other good things the state has done and continues to do.  As I mentioned, it participates with private energy corporations in developing clean coal technology as well as other cleaner burning fossil fuel efforts.  It also participates in the effort to develop new markets for our coal.  It has worked to create more transmission lines to deliver our natural gas and oil to market areas. 

These are things our state has done to try and increase or stabilize our revenues by strengthening the current resources we have.  The state has also used excess revenue of the good years to save and invest.  These investments, at times, provide additional revenues that are used to fill the budget holes left from the decreasing value of our market driven resources.  This effort combined with savings, have provided a long-needed stabilizing influence on our past boom and bust budget cycles.

Our challenge today

Our subsidy by mineral taxation has lightened the tax burden on Wyoming citizens over the years, but it has taken a hit, creating a shortfall.  The savings and investment of those savings are currently filling the shortages, allowing our state and local leaders time to make adjustments to their budgets. 

But reserves shrink and investments don’t always perform consistently.  The investment portfolio that perhaps saved our budget the year before could generate nothing the following year.  Trusting our trust funds is not the long-term solution to our shortfall problems. 

Most will argue that we need to reduce our expenditures.  I certainly agree with this position.  As with our own home budgets, we make less, we should spend less.  It should be no different with our state budget and over the last few years the state budget has been reduced in most areas.  But these are all short-term solutions to our current situation. 

What needs to be brought to the table are long-term solutions.  The solutions need to address the real problem of an inconsistent revenue stream, where nearly 60 percent of current revenues collected are market driven or out of our own control.  Wyoming needs to meet the challenge of reducing that market driven 60 percent, to 50 percent or even 40 percent of total revenue collected by the state. 

Now the question should be; How do we do this?

It’s time

By applying the two principles of budgeting in a shortfall of raising revenue and reducing expenses, I’ll offer one revenue increasing idea and two reducing expenditures ideas. 

A good start to the effort of stabilizing our revenue stream would be to pass a bill increasing the statewide lodging tax.   This increase would have the lowest effect on our tax payers and would be consistent to what surrounding states charge.   

For my ideas of reducing expenditures, I would suggest eliminating the $15 million annual automatic escalator for funding K-12 education.  I would also zero base the Department of Education budget and the Department of Health budget every ten years in the appropriations committee.  Stagger them to spread out the work load, but the two largest budgets in our state need more legislative scrutiny. 

These actions would be a good start in stabilizing our budget in Wyoming.

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