St. Germain hears public input on proposed room-tax increase

The St. Germain town board held a public hearing on Monday, Oct. 28, to take feedback regarding a proposed increase in the town’s room-tax rate.

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 St. Germain, 70 percent of collected room-tax revenues go to the chamber of commerce and the other 30 percent go to the town coffers. By state statute, 30 percent is the maximum share a municipality is allowed to receive.

Also by state statute, municipalities the size of St. Germain — with a population of fewer than 360,000 people — are not permitted to charge a room-tax rate of more than eight percent. St. Germain’s rate had been set at four-and-a-half percent sometime prior to 2018.

The St. Germain town board — like many other municipal and county government bodies — has been struggling recently to stretch every dollar in its budget due to the rising costs associated with insurance, tech support, road-paving projects, infrastructure and mechanical repairs, and myriad other expenses. 

Discussions about a potential rate hike began in January, and during a town board meeting on Sept. 26, supervisors voted to adopt an increase, pending a public hearing on the subject. The board was in consensus to plan for a new rate of the maximum eight percent.

“I think we should just go for the eight percent,” town supervisor Brian Cooper said at the time. “We get it done, we do it, and we don’t have to deal with it for a while.”

“I know there are a lot of municipalities going to eight percent right now,” said Angela Foulks, the principal officer of the St. Germain Chamber of Commerce during the same meeting. “As a chamber, we wouldn’t be opposed to that. That’s an extra $500,000 of revenue.” 

The topic was on the agenda during a regular board meeting on Thursday, Oct. 24, four days before the hearing.

Audience member Al Lamers said he owns multiple properties on Lost Lake, which he rents year-round.

“So, did that number come from the town or from the chamber?” he asked.

“It came from the town,” Cooper replied. “The conversation was that if we were going to do this and go through the process, we were just going to go for the max, and then we’re done. If the state raises it, we could come back later if we wanted to and ask for more. Just one-and-done and get it over with.”

“Eight percent is the max,” added town board chairman Tom Christensen. “It doesn’t have to be eight per cent. But to start the conversation, that’s the max. So it’s always easier to go down than up. It isn’t guaranteed, but that could be the worst it could be.”

Lamers asked about rates being charged by neighboring municipalities.

“It’s below the average,” Cooper said in reference to St. Germain’s four-and-a-half percent. “I think the average was five and a half or six. I think the highest numbers we had around us were six. And that changes. That was from December of 2023.”

“The people that rent the houses? You, for instance?” Cooper asked. “It’s not costing you any more money. You just tell them that this is the room tax; it went up, and you collect it.” 

“We’ve got a lot of people that come in to vacation here,” Cooper said. “And they rent and they use the roads. They use the parking lot and the community center. They use a lot of stuff around here. And this money could get put towards the upkeep of that ... it could re-pave and chip-seal some roads.”

“Not just specific to room tax,” added town supervisor Kalisa Mortag. “But it’s across the board. If you look at the overall budget, funds are always tight. Look at the price of everything. It’s getting harder and harder to find the money to get things done. It really is.”

Azael Meza, the chamber’s executive director, attended the meeting on Oct. 24 virtually.

“We’ve put it out in communications with all of our members,” he said. “There was a range of opinions. Some are supportive; some are neutral; and some are against it ... there’s not one consensus from our membership.”

“There’s a perception that it’s a money-grab by the chamber, which it’s not,” Meza said. “At least since I’ve been here, it’s not something that we’re actively pushing from the chamber ... whatever the rate is, our mission remains the same: we promote the town of St. Germain. And if the rate goes up, we have more money to do more campaigning with more outlets. It gives us more opportunities.”

In addition to its purview of advertising and promotion, the chamber also allocates a portion of its revenues in the form of grants to local organizations. This year, the chamber has provided $48,000 to the Bo-Boen Snowmobile Club and the St. Germain Non-Motorized Trails Committee for upkeep of and improvements to their trail systems. 

Town treasurer Jeanna Vogel said she had received feedback which included concerns about “the hassle factor” of a new room tax coupled with a recently-implemented Vilas County septic tank parking permit requirement. Some respondents told her “It’s just not worth it anymore” to rent properties. Some told her “I’m done. It’s just not worth the hassle.”

On Oct. 11, Kevin and Denise King of the Kings’ Homestead Cabin sent an email to Vogel stating simply: “If this is approved, we will no longer be renting our home to tourists.”

“The Vilas County stuff has generated a lot of criticism this year. A lot,” Vogel said. “I think that’s part of it. It’s kind of piling-on. It’s a timing thing.”

During last Monday’s public hearing, the “range of opinions” Meza described the previous week was evident.

Steve LaRiviere and Carolyn Ritter opposed any increase. Ritter cited concerns over other businesses in town being affected. As lodging becomes more expensive, she said, the result could be a negative-trickle effect.

Kelly McGill was in favor of an increase, citing record-breaking numbers of tourists visiting the Northwoods.

Meza said a majority of those chamber members with whom he spoke were not opposed to an increase in the room tax, but felt a jump to the maximum eight percent was too much.

Lamers said he would be in favor of an increase to five-and-a-half or six percent. Foulks, who spoke on behalf of Hiller Vacation Homes, said the same.

Rollie Boeding spoke on behalf of the ownership of Serenity Bay Condominium. He said the association voted on the issue and would only support an increase to five-and-a-half percent.  

An email sent from BJ Westfahl to Vogel was read aloud during the hearing.

“My wife and I are owners of a short-term rental in St. Germain,” he wrote. “We are … writing checks for roughly $10,000 of work to comply with the new zoning requirements. Now the town is petitioning for a nearly 100% increase in room tax. Last year we were told the zoning changes were required because of a lack of town and county resources to enforce the current laws.  Now we are facing an increase in tax, but no rollback in the zoning requirements.”

“In discussions or correspondence with the Town of St. Germain and the chamber of commerce,” Westfahl wrote, “I frustratingly discovered that neither the town or the chamber have developed a forecast or budget on how to use and manage the increased revenue. I cannot imagine a business increasing revenue to the tune of $500,000 without a plan. That is not good business. The lack of a plan and $500,000 in a slush fund has a propensity for inappropriate and wasteful expenditures.”

While Westfahl opposed the proposed rate of eight percent, he did not specifically reject a smaller increase.

“If the proposal would pass to increase the room tax, I would request that the owners whose properties are subject to the tax have greater control over the use in application of said tax,” he concluded.

Going back to the conversation in September, a consensus was reached among participants any increase should not take place for one year (or more) from the time a new rate is adopted. As accommodations providers often make bookings up to one year in advance, a room-tax increase might force some providers to renege on bottom-line prices they have already contracted with renters. The target date most widely accepted for implementation would be Jan. 1, 2026.

During the hearing, Rob Errington asked whether an increase could be applied by dates reservations are made, rather than when the rental actually occurs. The town board will research whether the Wisconsin Department of Revenue allows a tax-change to take place across multiple dates, or whether it must occur on one particular calendar day.

Cooper spoke to The Lakeland Times following the hearing and said he anticipates the town board will deliberate on a potential course of action during one of its November meetings.