ROOM TAX OVERVIEW
November 2, 2023
ROOM TAX
Authorized under state law (s. 66.0615, Wisconsin Statutes)
Maximum rate of 8%, municipalities may levy a higher rate under
certain conditions.
Madison has a 10% rate because it has long-term debt
outstanding to construct or renovate a convention center.
STATE LAW PRIOR TO 2015-17 BUDGET
Generally, municipalities with room tax prior to 1994 could retain
for general purposes the same share of room taxes as retained in
1994.
Madison could retain over 70% of room taxes for general
purposes; retained much less than 70% after Monona Terrace
opened.
Municipalities could directly appropriate room taxes through
budget.
ROOM TAX DISTRIBUTION
1987 TO 2019
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Distribution of Room Tax
1987 to 2019
Share of Room Tax to General Fund Share of Room Tax to Monona Terrace Share of Room Tax to GMCVB
Monona Terrace
Monona Terrace Operations
Repayment of GO debt issued to
finance construction of Monona
Terrace
Strict levy limits
State law limits on
uses of local room
taxes
2015-17 STATE BUDGET
Starting in 2017, at least 70% of room tax revenues must
be allocated by Room Tax Commission.
Up to 30% is retained by municipality for any purpose.
Municipalities that used 1994 exemption must provide
1993 financial statements to DOR
DOR Room Tax Report – listing of room tax rates for all
municipalities in Wisconsin
STATE LAW (CONTINUED)
“Tourism” = Travel for recreational, business or educational
purposes.
“Tourism promotion and tourism development” = Significantly
used by transient tourists; reasonably likely to generate paid
overnight stays:
–Tangible Municipal Development, including a convention center
–Tourism Marketing, including advertising, materials, event recruitment
–Transient Tourist Informational Services
ROOM TAXES COLLECTED
1992 TO 2023 (PROJECTED)
-75.0%
-55.0%
-35.0%
-15.0%
5.0%
25.0%
45.0%
65.0%
85.0%
105.0%
125.0%
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Room Taxes
(left axis)
% Change
(right axis)
Recession
COVID-19
Recession
Recession
Avg annual % Chg – 1997 to 2006 = 4%; 2010 to 2019 = 10%
GMCVB / DESTINATION MADISON CONTRACT
2015 TO 2022
Contract term – 1/1/2015 to 12/31/2018 with one 4 year extension.
Program Goals – Established annually by Monona Terrace and GMCVB.
Compensation – See table below -- contract amended to specific
amounts during pandemic (2020 to 2023).
Year Share of Tax Year Share of Tax
2014 20% 2018 26%
2015 21.5% 2019 28%
2016 22% 2020 30%
2017 24% 2021 32%
2022 34%
2024 to 2028
28% of prior year room tax collections with program goals set by Monona
Terrace and Destination Madison
OVERTURE CONTRACT
Overture operates under a Structural Agreement with the City and an Annual
Contract.
The Structural Agreement set a City subsidy goal of $2 million, adjusted for
inflation, subject to appropriation by the Common Council.
2024 MONONA TERRACE OPERATING BUDGET
Sources
Catering Concession 5,000,000
Facility Rental 3,892,625
Gift Shop Sales 120,000
Building Tours 10,000
Miscellaneous Revenues 163,500
Transfer In (Room Tax) 5,392,000
14,578,125
Uses
Staff 6,308,754
Concession Vending Contract 5,000,000
Building Utilities 448,500
Other Purchased Services 1,473,069
Supplies 436,129
Interdepartmental Charges 516,532
Transfer Out (PILOT and Debt Service) 395,141
14,578,125
2024 MONONA TERRACE CAPITAL BUDGET
MONONA TERRACE CAPITAL FINANCING
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2023 2024 2025 2026 2027 2028 2029
Debt Service Stabilizes at $1m / year
59% GO / 41% Cash
GO Cash Debt Service
MONONA TERRACE RESERVES:
WELL BELOW TARGET OF 20% OF BUDGETED EXPENSES
CITY TOURISM
2019
2020 2021 2023 2022 2023 2024
ACTUAL
Actual
Actual BUDGET Actual Post-Budget Projected Preliminary
City Tourism Marketing Activities
Sister Cities Program 27,000 15,000$ 16,200$ 30,000$ 19,977 30,000$ 30,900
Civic Conferences / Fairs / Festivals / Summer Concerts 132,895 65,250 97,340 177,500 73,152 202,500 177,500
Civic Conferences (e) 4,663 1,500$ 35,000$ 4,500 35,000$ 35,000$
Civic Promotion (e) 11,732 -$ 3,490$ 15,000$ 7,227 15,000$ 15,000$
Madison Music City (g) -$
Dane Dances (g) 25,000 10,000$ 15,000$ 25,000$ 15,000 25,000$ 25,000$
Make Music Madison (g) 30,000 10,000$ 10,000$ 30,000$ 15,000 30,000$ 30,000$
Songwriting Conference (g) 25,000 10,000$ -$ -$ -$ -$
Music Tourism Study / Implementation -$ 45,000$ 25,000$ 1,000 50,000$ 25,000$
Fairs / Festivals / Summer Concerts (f) 16,500 12,500$ 13,800$ 17,500$ 15,000$ 17,500$ 17,500$
Downtown Temporary Art Installations 20,000 21,250$ 10,050$ 30,000$ 15,425 30,000$ 30,000$
WIAA Basketball Tournament (h) - -$ 15,000$ 15,000 15,000 15,000
Subtotal City Tourism Marketing 174,895$ 80,250$ 113,540$ 222,500$ 108,129$ 247,500$ 223,400$
Subtotal Tourism Marketing 5,304,857$ 2,781,452$ 3,950,099$ 5,761,537$ 4,205,209$ 5,786,537$ 6,089,295$
Room Tax Commission Administration 18,800 - -$ 20,000$ 2,165$ 32,835$ 20,000$
2024 ROOM TAX COMMISSION BUDGET
2019 TO 2024 ALLOCATIONS
2019 2020 Actual 2021 Actual 2022 Actual 2023 Adopted
2023 Projected
(June 2023)
2024 Motion
Chg from 2023
Adopted
Revenues 18,929,841 5,862,255 12,088,276 18,488,410 19,000,000 19,967,000 21,165,000 11%
Tangible Municipal Development (s. 66.0615 (1) (fm) 3., Wis. Stats.)
Monona Terrace 5,184,540 5,045,935 3,839,685 4,150,574 6,688,446 6,688,446 6,207,700 -7%
Debt Service 800,025 272,275 112,883 115,479 207,721 207,721 416,700
Operating 3,795,928 4,295,016 3,559,302 3,962,100 4,825,725 4,825,725 5,392,000
Capital 588,587 478,644 8,793 72,995 1,655,000 1,655,000 399,000
Alliant Center, Olbrich and
Zoo
642,352 - 738,152 738,152 1,386,000 88%
Overture 2,000,000 1,200,000 1,500,000 1,600,000 2,095,000 2,095,000 2,180,000 4%
Tourism Marketing (s. 66.0615 (1) (fm) 1., Wis. Stats.)
Destination Madison 4,989,009 2,655,643 3,750,000 3,900,000 5,264,037 5,264,037 5,591,000 6%
Event Booking Assistance 140,953 45,559 150,000 197,080 275,000 275,000 275,000 0%
City Tourism 174,895 80,250 113,540 108,129 222,500 247,500 297,500 34%
Other 33,800 - 21,096 16,229 35,000 47,835 35,000 0%
Room Tax Retained for General Purposes
General Fund Share 5,671,290 1,758,677 3,626,483 5,667,799 5,700,000 5,546,523 6,350,000 11%
Total Expenditures 18,836,839 10,786,064 13,000,804 15,639,811 21,018,135 20,902,493 22,322,200 6%
Ending Balance 382,596 (1,770,427) (2,642,355) 3,988,270 950,352 3,104,802 1,989,531
Transfer from TID 25 Surplus -
No Transfer to General Fund 1,758,677 3,626,483
Revised Ending Balance 4,912,058 1,896,656
Structural Balance
(rev v exp)
93,002 (4,923,809) (912,528) 2,848,599 (2,018,135) (935,493) (1,157,200)
2024 Room Tax Fund Condition
ROOM TAX FUND RESERVE FUND POLICY
2023 fund balance share of RTC appropriations = 14%
2024 projected fund balance share = 9%
Each 1% of appropriations = $153,000; each 1% of revenues =
$190,000.
“The Room Tax Commission shall by its 2029 budget establish a reserve at
least equal to 10% of budgeted appropriations for Room Tax Commission
programs. The reserve amount for the 2024 budget will be at least 5% of
budgeted appropriations for Room Tax Commission programs.”
“Reserves will only be used to respond to declining revenue of more than
10% compared to the prior year. Use of reserve levels requires an
affirmative vote of at least two-thirds of commission members (4 of 6).
Reserve levels will be replenished to policy target within 5 years of event.”
SHARE OF ROOM TAXES – 2016 TO 2028 (PROJECTED)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Destination Madison Monona Terrace Overture All Others General Fund
PROJECTED FUND BALANCE
-40.00%
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
2022 2023 Proj 2024 2025 2026 2027 2028 2029
Fund Balance Share of Room Tax Commission Appropriations
8% growth post 2024
4% growth post 2024
28% of room tax to Destination Madison
1% growth in MT Subsidy
50% support for Zoo and Olbrich
Overture and Alliant grow at 3% annually
Fund MT operating deficit
Fund MT capital -- equipment and machinery with
RT cash; building improvements with RT-supported
GO borrowing
No growth in City Tourism funding