RHINELANDER - Voters in Rhinelander will decide on April 7 if the city should raise its sales tax. The increase would be ½ of a cent for every dollar. The proposal is an advisory question, so if it passes, the city would still need help from the state legislature if it passes.
Rhinelander wants to increase its 5.5 percent sales tax to 6 percent using a Premier Resort Area Tax. That increase would only apply to items at what the Wisconsin Department of Revenue considers tourist related retailers. Those range from toy stores, to restaurants, to stores that sell sewing supplies.
By state statute, all of the money collected will go to infrastructure improvements.
"When you have a bad street, you also probably have also bad infrastructure underneath it, and that's what the issues is," Rhinelander Mayor Dick Johns said. "You can cap those streets, but you've got to really do the work on it in order to do it right."
Rhinelander City Administrator Blaine Oborn says this is the only type of sales tax cities are allowed to put in place under state law. Eagle River is one of five municipalities that have passed the tax in Wisconsin. Voters approved the increase in 2006.
A municipality needs to have at least 40 percent of its equalized assessed property values used by tourism-related retailers in order to enact this type of increase, according to the Wisconsin Department of Revenue. However, municipalities can seek an exception to utilize the tax. That is what Rhinelander would do if the advisory vote passes.
Rhinelander city leaders estimate two-thirds of the sales tax will be paid by commuters and visitors.
"Everybody who comes into the Rhinelander area is going to pay the tax and that's much easier [doing] that [instead of] trying to do it with [just] 7,000 people on the tax-roll," Johns said.
According to city estimates, Rhinelander generates around 66 percent of the $3.8 million dollars in Oneida County's sales tax revenue. However, the city doesn't get any of that money.
Johns says he's tried to work with the state. The city asked the legislature to give cities the power to raise their sales tax, which counties are allowed to do, but that didn't work. Johns says this is the only option for Rhinelander to help itself.
"Look at the potholes we've got and all the work we have to do," Johns said. "We need help, and there is only one way to do it, and it is to help ourselves."
The city says it has immediate infrastructure needs at Lincoln Street (Oneida to Evergreen), $425,000; Lincoln Street (Evergreen to Eisenhower Parkway), $540,000; Stevens Street (Frederick to Dwight), $460,000; Boyce Drive (Prospect St. to Hwy. 17 Bypass), $275,000; Kemp Street (Wabash to Oneida), $230,000; Oneida Ave (Lincoln Street to Oneida Ave Bridge, $190,000; as well as many more roads that are in need of repair.
Newswatch 12 spoke with some Rhinelander business owners to see what they think about the proposal.
They all agree infrastructure, especially roads, need to be improved, but none that we spoke with are certain a Premier Resort Area Tax is the way to go.
"I don't really feel downtown Rhinelander is a resort area. I would like it to be. Perhaps better roads would help that,"said Hatch, the owner of Imaginuity in downton Rhinelander. "I don't feel that calling it a resort area tax really invites tourists to our downtown, which is a negative connotation to me."
Hatch doesn't think customers will notice much of a difference in cost, but it will cause a little extra work on her part.
"From an administrative standpoint, however, because I have another store in Minocqua, I do have some pricing that rounds up to an even number with tax so, I mean that's going to be a - shoot that theory out the window because it will not be an even dollar at this store," she said.
Shirts, Signs and Designs and Sunburst Tanning owner David Meinnert feels the city should have looked at other options. He also doesn't think the proposed tax is a broad enough measure to raise the needed revenue.
Meinnert wants the city to instead work out a deal with the county.
"The county has the opportunity to have a .5 percent county tax and half of that revenue they collect is collected inside the city limits and the city doesn't get to have any of it. The county keeps it and spends it. In the meantime, half of our cost is for infrastructure which more than half of the people live outside the city limits. They're the ones using the roads or whatever," Meinnert said.
Meinnert also thinks leaders should consider cost cutting measures rather than just taxing.
"Businesses in the city limits need tax relief. They've got to come up with something to generate some revenue that gives the people in the city limits some kind of tax reduction. They're driving property values down because of the tax base. Who's going to build or bring anything into Rhinelander when you can build outside the city limits and pay half the taxes?" Meinnert added.
City records estimate the Premier Resort Area Sales Tax will generate at least $400,000 annually in additional funding for transportation infrastructure. That would be instead of raising property taxes or cutting 4 or 5 city positions.
The city has cut 11 positons in the last 15 years. City leaders say the state continues to provide tax relief to businesses without replacement funding. For example, the paper mill in Rhinelander has gone from 52 percent of city property tax revenue to 4 percent in 2014 and 1 percent in 2015.
You can find links to the city's proposal as well as the state Department of Revenue FAQ page.
Lauren Stephenson contributed to this report.