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Janesville city council debates room tax

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Marcia Nelesen
November 3, 2013

JANESVILLE--The city of Janesville next year will send more of its 8 percent room tax to the Janesville Area Convention & Visitors Bureau, but some city council members think that's still not enough.

Councilman Brian Fitzgerald led a recent push to increase money given to the visitors bureau, which would require corresponding cuts in the 2014 city budget.

The Janesville Convention & Visitors Bureau is an independent, non-profit corporation funded by the city hotel room tax.

A majority of council members at a recent budget study session agreed to send 5 percent more of the room tax to the visitors bureau next year, meaning the visitors bureau will get 47.5 percent of room tax collected.

That's less than the 10 percent increase Fitzgerald was seeking.

Every dollar invested with the bureau creates more than $17 in economic impact for local business, Fitzgerald said, citing visitors bureau statistics.

“Nothing we do here in City Hall has that kind of return,” Fitzgerald said.

Council members voted 4-3 in favor of the 5 percent increase and told acting City Manager Jay Winzenz to find $31,500 in cuts to the city budget to compensate.

The increase is the second for the visitors bureau in two years.

Councilman Matt Kealy convinced the council in 2012 to up the percentage of room tax given to the visitors bureau in 2013 to 42.5 percent.

In 2012, total room taxes totaled $726,625, and 37.5 percent—or $272,484—was given to the visitors bureau. Numbers for 2013 won't be available until the year is done.

HOW THE MONEY IS SPENT

Christine Rebout, bureau executive director, told council members she spends most of her money not to lure leisure travelers but to market the city as an affordable place with nice facilities for business meetings and conventions.

Rebout's staff attends about six trade shows a year.

Rebout said she would use any additional money to market sporting events and tournaments.

“We really need to jump into it and do more,” she said. “We have nice facilities."

She cited the Youth Sports Complex, Dawson Fields and the ice arena as examples.

Sporting events, meetings and conventions help fill hotel rooms in the off season.

The city lacks available hotel rooms in August and September, but investors are reluctant to build more rooms if they can't fill them in the slow months, Rebout said.

Rebout is also at a point where she might also need to hire an additional sales person, she said.

In addition, it costs to bid for events such as the World Water Ski Show Tournament.

The city is in danger of losing the ski show because it has not upgraded the site while other communities are investing in their venues, she said.

“We're not going to automatically keep nationals and world here if we are not going to continue to invest,” Rebout said.

'IT'S BEEN ABUSED'

Fitzgerald said the room tax when created was intended for the convention and visitors bureau.

“Quite frankly, it's been abused and used for so many things,” Fitzgerald said.

He suggested hotel owners agreed to the tax in 1988 because the money was to be used to promote the city and fill hotel rooms.

Fitzgerald did his own survey and found that out of 15 cities and towns surveyed, Janesville ranked fifth-lowest in the percentage of room tax given to its bureau.

Beloit and Wisconsin Dells are at 90 percent and Racine and Oshkosh are at 85 percent, for example. Brookfield gives its visitors bureau the least--17 percent of room tax collected.

Fitzgerald said Janesville is competing with every city in Wisconsin for visitors and conventions.

“Even Beloit is outspending us by a huge amount,” Fitzgerald said. “It's not a race where you want to be in second place.”

Winzenz disagreed with Fitzgerald's contention that money was “taken away” from the bureau.

No percentage was specified in the original state law that created a 5 percent room tax, Winzenz said. In 1988, Janesville established a 5 percent room tax and took 4.5 percent, directing a half percent to the bureau.

A state amendment in the 1990s specified that 70 percent of any increases go to visitors bureaus.

The city increased the room tax by 1 percent each year in 1997, 2000 and 2002, with 70 percent of each increase going to the visitors bureau.

The city justifies keeping the money because visitors also use services residents pay for, such as streets and emergency responses.

Fitzgerald said it is imperative the bureau get more money now because businesses plan several years in advance.

“It isn't something we're going to see results overnight,” he said.

In addition, legislation has been proposed that would force cities to give 70 percent of all room tax collected to their visitors bureaus.

“If the state of Wisconsin passes the legislation that forces us to go to 70 percent, now it's a free for all,” Fitzgerald said. “Everybody is increasing their budget. I'd rather be in on the front edge. At that point, we have an advantage.

“This is a race we've got to be in … We've got to be able to compete on a level playing field with these other cities.”

Councilman Douglas Marklein, too, sounded a warning. He opted for a 5 percent increase in 2014, though, because he said the 2014 city budget already is bare bones.

Marklein reminded council members of the upcoming reconstruction of Interstate 90/39 in the next five to seven years.

“As a traveler, I'm usually loath to pull off the highway when there is road construction,” Marklein said. “I will go to the next city to avoid it.”

He said the planned sound barrier walls won't help.

“We will have these barrier walls that will basically block Janesville out for people driving through Janesville. And, if they (the state) increase the speed limit, (drivers) will be whipping through here about 80 to 85 miles an hour. They won't even see Janesville until they're halfway to Milton.

“We will need to look for ways to pull people off this highway and make this a destination worthy of stopping,” Marklein said.

“It's a wise investment to make, especially with what's going to happen in the next eight or so years.”



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