Lawmakers urging lodging tax support

September 26, 2018

As political action committees wrestle for the fate of the lodging tax, local legislators have staked out the mid-ground, suggesting Teton County voters consider ways to reform the tax without rejecting it on Nov. 6.

Teton County’s state delegation penned a Guest Shot letter on page 5 of today’s News&Guide asking their constituents to keep the tax — which provides millions of dollars each year to Jackson and the county by charging tourists extra for hotel stays — after which they’ll try to strike a better deal in Cheyenne while working within the current legislation.

“My fundamental belief,” said Sen. Mike Gierau, D-Teton, “is that this revenue stream, in a time and place in Wyoming when they’re few and far between, is important for our community and not one we can afford to lose.”

He’s well aware that many of the people he represents feel they aren’t getting enough in return for the tourism the tax encourages. With 60 percent — about $4.4 million last year — earmarked for advertising and promotion of Jackson Hole, opponents shun the 40 percent local government receives as inadequate to mitigate the impacts of millions of visitors.

Bill Phelps, the leader of a decadeslong crusade against the tax, argues on the website for his PAC, EnoughIsEnoughJH.com, that voters ought to reject it.

“Find the courage to stand up to lobbyists in Teton County and then petition legislators,” the website states. From there, he writes, the county could fashion an agreement that eliminates the restrictions on promotion funding and diverts that money to benefit the community.

But Gierau rejects the notion that voting no on the tax will put Teton County in a better position to negotiate its terms. And he thinks he can achieve the same goal with “minor tweaks” to the statute governing the lodging tax.

Open to interpretation

Gierau’s strategy boils down to five words: “other specific tourism related objectives.”

So ends the list of acceptable uses for the portion of lodging tax revenue designated for promotion. As Gierau sees it, that language is broad enough to cover all sorts of desirable things, like funding for community events.

Peter Michael, Wyoming’s attorney general, disagrees.

So Gierau wants to revise the statute to cast a wider net, allowing the tax to do more than nudge Jackson Hole toward ever higher levels of tourism through endless advertising, and thereby endearing it to his constituents.

“We’re not changing percentages, we’re not doing anything new,” Gierau said. “We’re just clarifying what a lot of counties are already doing.”

And what Teton County was doing until 2017. Before then the Jackson Hole Travel and Tourism Board used lodging tax revenue to plow roads, groom ski trails and pay for concerts, considering these in the “other specific tourism related objectives” category.

But amid questions of the legitimacy of such expenses, the Teton County Attorney’s Office sought an opinion from the attorney general, who took a narrower view and concluded that promotional funding could be used only in the limited sense of advertising and publicizing.

“I don’t think there’s any leeway now, because the attorney general has spoken,” County Attorney Keith Gingery said. “Once you have the answer it’s hard to go back.”

With that in mind Gierau feels the best way to save the lodging tax is “a very minor language tweak” that could be inserted into the current law as the state Revenue Committee reviews funding sources.

He has asked the state’s lawyers to come up with a new way to word the statute that permits the 60 percent (or 90 percent, in other communities) to be used to alleviate the burden of increasing tourism. That would effectively give counties the ability to use the full 100 percent of tax revenue for community benefit, at least to some extent.

“I don’t believe we have to kill this... to fix it,” Gierau said.

Choosing our message

Lodging tax adversaries like Phelps argue Jackson Hole can’t preserve its wildness and unique character in the face of boundless tourism. It may be immediately profitable but will eventually destroy the qualities that attract those tourists, in turn diminishing the local economy, he argues.

Lodging tax critics want Teton County to update the tax. Rather than endure the levy in its current iteration, they’re lobbying fellow voters to eliminate it and start from scratch.

Phelps believes the loss of that revenue — which helps fund public safety, transportation, pathways and parks — would spur elected officials to strive for a new, satisfactory version of the tax.

“You’ve had eight years to fix it,” he writes on the EnoughIsEnough website. “Fix it first, then ask us to vote for it.”

Sen. Andy Schwartz, D-Teton, countered that this approach would only worsen the situation, by signaling to the rest of the state that Teton County can survive without the $3 million the tax deposits into its coffers.

“If you’ve got local government saying, ‘We don’t need this money,’” Schwartz said, “the message in Cheyenne is ‘Fine, you don’t need our money either.’”

“Approving it is probably going to make it easier for me in Cheyenne,” he said. “It’s saying, ‘Look, we want to continue with the lodging tax, but we want to fine-tune it.’”

Gierau agreed, saying he expects to make progress on altering the tax’s language in the coming months and once the Legislature enters its general session in January.

“That,” he said, “would change how that money could be spent.”

Gierau acknowledges this is only a partial fix. Many people would like to see a more fundamental change, allowing Teton County and Jackson to take home a larger piece of the lodging tax pie.

The 60-40 split in place here stands in contrast to the rest of the state. Every other county receives just 10 percent of lodging tax revenue, with the rest fueling advertising campaigns. But Teton County, by far Wyoming’s most significant tourism hub, is in greater need of funding for community needs than for advertising, and many felt a different arrangement would make more sense.

Former Rep. Clarene Law, who served seven terms in the state House, pushed for an exemption to the 90-10 split. She succeeded, and ever since Teton County has enjoyed a larger proportion of lodging tax revenue than its neighbors.

“I think it’s worked quite well for us,” Law said. “I really do.”

Even so, many people dissatisfied with the tax would no doubt prefer a still better deal.

Some even suggest 100 percent of the money go to local government.

Gingery, the county attorney and a former state representative, said he attempted to create a more nuanced split during his time in the House. He’s optimistic, saying he thinks something along those lines is still possible.

“Nobody else has a dog in the fight,” he said. “It’s really just internal in Teton County.”

But current legislators say the 60-40 split was hard-won and argue that changing the proportions again would be a tall order considering Wyoming’s political reality.

Gierau worries that tampering with the tax too much could lead to an undesirable outcome, especially with the state desperate to offset a massive budget shortfall. As he put it, “Revenue streams that are supposed to go one way could all of a sudden go another way.”

Reopening the lodging tax to major changes could draw attention to it as a potential source of state funding, with legislators loath to tax their own constituents.

“We’ve got a $400 million structural deficit and a whole lot of people who promised not to raise taxes,” Gierau said. “And therein lies the rub.”

Schwartz said it’s unlikely the rest of the state would show much sympathy. Tourism is Wyoming’s second-largest industry after energy, and it’s the more stable of the two. Therefore, other counties may view high tourism rates more favorably and be skeptical of redirecting additional advertising money.

“It’ll be a Teton County bill,” Schwartz said, “and I’ve run enough of them to know they’re problematic.”

As the legislators see it, a slight reworking of the law could have nearly the same effect as a complete do-over, while preserving vital revenue for the town and county, and without risking unintended consequences.

“The lodging tax, for this community, has a great many more benefits than liabilities,” Gierau said, “and that’s why I support it.”

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