City of Eagle River room tax share causes controversy

During the Oct. 28 meeting of the Eagle River common council, the group spent hours tweaking the city’s budget.

When the allocation of room-tax revenues was discussed, council member Jerry Burkett expressed his extreme dissatisfaction with the situation and went so far as to declare a state of “war” between the city and the Eagle River Area Chamber of Commerce.

Room tax is a surcharge applied when out-of-towners rent lodging accommodations such as hotel rooms, resort cabins, or private homes.

In the case of Eagle River, 90 percent of collected room-tax revenues go to the chamber of commerce and the other 10 percent go to municipal coffers in the city and the adjoining towns of Lincoln and Washington.

When room tax was first implemented in Wisconsin decades ago, state statute limited a local government’s share of the revenues to one tenth. Since then, the program has been altered and allows for municipalities — like neighboring St. Germain — to keep up to 30 percent.

Only those municipalities which signed on to the room-tax program after a certain date are entitled to the larger share of the revenues, while early-adopters like Eagle River are still limited to 10 percent.

“There’s three of us fighting this tremendously,” Burkett said during last week’s meeting, referring to Eagle River, Lincoln, and Washington. “And we’re not giving up.”

After the meeting, Burkett told The Lakeland Times he and his colleagues in Washington and Lincoln have broached the subject with state legislators.  

“We’ve done that,” he said. “We’ve asked them to change it on a state level. It hasn’t happened yet. We’ve talked with (State Representative Rob) Swearingen about the inequity.” 

He also said a representative of the town of Lincoln is attempting to initiate a dialogue with State Senator Mary Felzkowski on the subject.

“We don’t have a problem with other towns getting 30,” Burkett told the Times. “We have a problem with the fact that we aren’t allowed to stay up with the times and receive the same amount that’s offered now. It just doesn’t make sense. I’m getting used to the short end of a few sticks but this is one I’m going to do everything I can to change.”

The state legislature, he said, won’t allow the city council to raise the tax levy. 

“We are limited-out on our tax levy,” Burkett told the Times. “How do you do it? You can’t raise enough money ... with the levy-limits, we’re desperately in need of funds any way we can get them.” 

In 2000, the three municipalities — which consider themselves to be one single tourism destination — formed a joint room tax commission.

Eagle River city administrator Robin Ginner explained to the Times the organizational relationships following the meeting.

“The room tax commission retains a surplus of the tax collected (the chamber is part of that as the tourism entity) and we’ve established a grant program to help put some of that money back into the area in terms of building of tourism infrastructure, adding new events, or marketing to bring more people to the area for events,” she wrote in an email.  “The room tax commission is currently working on a grant program to allow some of that funding to be funneled back to the municipalities to help with the added expenses that come with the massive influx of tourists every year.” 

Per the tourism zone agreement which formed the commission, the purview of a tourism entity is to “obtain staff, support services and assistance in developing and implementing programs to promote the tourism zone to visitors.”

Ginner also described the procedure by which grants are awarded.

“The grants start with the grant committee (made up of members of the chamber’s ad & promo committee and members of the room tax commission – two each – and Kim Emerson from the chamber acts as the chair),” she wrote. “The grant committee receives and reviews grant applications then makes a recommendation for recipients to the room tax commission. The chamber does not award the grants. The grant funds are surplus funds under the control of the room tax commission.”

What’s fair

During last week’s meeting, Ginner told the council the city is “locked” at the rate of 10 per cent.

“We’re not going to stay locked at it,” Burkett said. “Because if I have to, I will dissolve it and then come back in.”

“Robin has looked into that pretty heavily,” said city clerk Becky Bolte.

“We can’t,” Ginner replied in reference to a potential dissolution of the chamber.

“I don’t care,” Burkett replied. “Then they’re going to give us a grant every year.”

“We are working on that,” Ginner told him.

“And I’m not talking about the extra money they want,” Burkett said. “They want a raise in the room tax by, like, another four percent or whatever it is. Then they’ll give us on that. That’s not good enough. It’s all-or-nothing.”

Currently, the three municipalities charge a room-tax rate of four-and-a-half percent.

Burkett later clarified his comments for the Times.

“You’re allowed to raise it up to eight if the townships agree,” he said. “They’ve said ‘We’ll raise it up to eight per cent and we’ll give you 30 percent of the increase.’ I’m sorry, but that’s just rubbing my face in it.

I want what’s fair.”

Ginner responded to Burkett by letting him know if the city were to raise the room tax a point-and-a-half “and keep the 30 percent of that extra point-and-a-half, it doubles the amount that we keep.”

“Granted, it gives more to the chamber which ... I won’t go there but it doubles the amount that we keep,” she said. “And we — the room tax commission — is looking into — we’ll be back in December with a proposal — to have a specific municipality grant. I forget how much it is — of the surplus from the room tax commission — to allow for things like snowmobile crossings and different things like that.”

“Well, I understand that,” Burkett said.  “But, forgive me, they gave $75,000 to the Windigo for an advertising grant before they even dropped the puck at the first game. I’m sorry, but the city and the other municipalities need help with their bills. The grants should come here.”

“I agree,” Ginner said.

The Wisconsin Windigo is a tier-II junior hockey league team for 15-to-20-year-old players and uses the Eagle River Hockey and Sports Arena as its home rink.

The team is a privately-owned, for-profit business which began playing in Eagle River in the 2022-23 season.

“It’s going to have to do something, or there’s going to be a war,” Burkett told the council. “I’ve already started the war, so we might as well win it.”

“I’m fine with that,” Ginner replied. “Perfectly fine with that. It would just be nice if the legislature said, ‘Why are we punishing people that were early adopters of this entire thing?’ and they just made it 30 percent across the board but…”

“It’s just discrimination,” Burkett said.  “We work harder. It takes longer for us to generate the amount to handle the money. Then we get ... what? One-third of everybody else? Well, this is going to go up more next year. I promise you that.”

Equity situation

The Times later asked Burkett to clarify his use of the word “war” as it related to the situation. 

“I’ve been talking to the chamber,” he said.  “And, of course, the chamber is resisting. At the same time, the chamber has the ability to give out grants to other businesses and I think the grant should be the difference between ten and 30 percent each year and it should come back to the city; same with the other townships.  We’re the ones that are keeping the roads and the trails and everything going so we have tourism.”

The city, Burkett said, wants “to be” a tourist-based economy. 

“But we also need all the help we can get,” he said. “And if St. Germain can get 30 percent and the town of Cloverland can get 30 percent, there’s no reason why Eagle River and Washington and Lincoln can’t get 30 percent.”

Otherwise, Burkett reiterated for the Times as he had during the Oct. 28 city council meeting, he will “do everything I can to dissolve the chamber and bring it back where it’s now an equity situation.”

“And they know that,” he said. “If they’re not going to play fair, then I’m prepared to not play fair. There’s no other way around it. I think that if we can’t come to terms with the room tax commission and the chamber, well, then, we’re going to have to do something different.”

As for replacing the chamber of commerce with a different tourism entity, Burkett wouldn’t rule it out.

“If it’s necessary,” he said. “I don’t want to do that. All I want is everybody to be equal. I don’t like to threaten, but by the same token, we’ve been working on this for six months or longer and it’s not getting me anywhere so what would you do?”

Burkett mentioned the legislature again.

‘We have been talking to state legislators,” he said. “It’s not working. I don’t know legally what I can do.  If we had to close down the chamber of commerce for one day and start a new one, I would look at that — if it would get us what we needed. There’s no other way around it. I don’t know if I have the right to close down the chamber of commerce but that doesn’t mean I necessarily want to send them all of our money, either. All I want is equality. Is that wrong? It sounds like I’m trying to be a jerk. I’m not trying to be a jerk; I’m trying to make it equal.”  

Kim Emerson, executive director of the Eagle River Area Chamber of Commerce, had nothing to say for the record regarding Burkett’s comments about possibly dissolving the chamber and his use of the word “war” as it relates to the situation. 

“I don’t have a comment,” she said. “Other than we are our own organization, and they couldn’t dissolve us.”