Following a joint meeting with the Tourism Commission last Tuesday, the Merrill city council decided to lay over until October a proposal to increase the city’s room tax.
Mayor Bill Bialecki had introduced a proposal to increase the room tax to 8 percent from the current 4 percent. Room tax is an extra fee collected by lodging establishments in addition to their room rates. By state law, at least 70 percent of the room tax collected has to be used for tourism-related expenses.
In Merrill, most of the room tax money goes to the Merrill Convention & Visitor’s Bureau and is overseen by the Merrill Area Chamber of Commerce. Small percentages also go to the city and the Merrill Area Recreation Complex.
In 2012, Merrill’s room tax generated $45,639. Of that, $35,107 went to the visitor’s bureau, $5,851 went to the MARC and the city retained $4,681.
Council members want to see a plan for how the city’s portion is being used before acting to raise the tax. “I think we should stay where we’re at and discuss where our portion is being spent and where it should be spent,” said council president Steve Hass.
“Until we have a plan for how the city’s portion will be spent, I don’t think we can go any farther with this discussion,” said alderperson Anne Caylor.
According to city finance director Kathy Unertl, the city’s 2012 portion went into the general fund.
The room tax increase has been proposed to help pay for directional signage in Merrill.
“We’re looking for a mechanism to get better signage around town,” Bialecki said. “I feel this is a good mechanism for providing signage.”
Tourism Commission member Russ Grefe argued that city signage isn’t a proper use of room tax funds.
“The intent of the money is to help generate more events to bring in overnight stays,” he said.
Merrill Chamber executive director Debbe Kinsey said there are 12-15 events that receive room tax funding.
Kinsey said she felt the Chamber could use additional money to fund events, but she didn’t favor doubling the room tax.
Grefe, who manages the Merrill AmericInn, said a hike to 8 percent would add $4 to the average room rate. That could be enough to convince would-be visitors to stay somewhere else, he said.
“It’s easy to go beyond the tipping point where you lose guests,” Grefe said.