Changes to the local room tax and providing a penalty

A single municipality that imposes a room tax may create a commission, which is defined as an entity to coordinate tourism promotion and development (tourism). If two or more municipalities in a zone impose a room tax, they must create a commission. Current law defines a zone as an area made up of two or more municipalities that, those municipalities agree, is a single destination as perceived by the traveling public.

Current law requires a commission to contract with an organization to provide staff, development, or promotional services for the tourism industry in a municipality if a tourism entity does not exist in that municipality. A tourism entity is defined under current law as a nonprofit organization that existed before January 1, 1992, and provides staff, development, or promotional services for the tourism industry in a municipality. The bill changes the definition of tourism entity to be a nonprofit organization that spends at least 51 percent of its revenue on tourism promotion and development and provides destination marketing staff and services for the tourism industry in a municipality without regard to when the entity came into existence.

Under the bill, the majority of the members of a commission, and the majority of the members of the governing body of a tourism entity that spends between 51 percent and 70 percent of its revenue on tourism promotion and development, must be owners or operators of restaurants, tourist attractions, or lodging facilities which collect the room tax, and which are located in the municipality for which the room tax is collected. Also under the bill, the governing body of a tourism entity must include at least one owner or operator of a lodging facility in the municipality for which the room tax is collected.

Under current law, a municipality that first imposes a room tax after May 13, 1994, must spend at least 70 percent of the amount collected on tourism; the expenditure may be spent directly by the municipality or forwarded to the commission for its municipality or zone. The 30 percent or less of the room tax revenue that is not spent on tourism may be retained by the municipality and used for any other purpose. If a municipality collected a room tax on May 13, 1994, it may retain up to the same percentage of the room tax that it retained on that date, even if that percentage is more than 30 percent.

Under this bill, any revenue that is not retained by the municipality must be forwarded to a tourism entity or a commission, although the person collecting the room tax may retain 3 percent of the tax collected. Also under the bill, a municipality that retains more than 30 percent of the room tax must reduce the amount that it retains to no more than 30 percent. The reduction must be made in equal amounts over a three-year period beginning on January 1, 2013.

The bill requires municipalities annually to certify and report to the Department of Revenue (DOR) the amount of room tax revenue collected by the municipality in the previous year as well as a detailed accounting of amounts that were forwarded to a commission or tourism entity and such an accounting for amounts of at least $1,000 expended by a commission or tourism entity. DOR is required to collect the reports and make them available to the public. In addition, the report must identify the members of a commission or tourism entity, and their business or employment affiliation, if any.

This bill authorizes an individual to bring a circuit court action alleging that the municipality in which he or she resides is not allocating room tax revenue as required by the statutes, or that a commission or tourism entity which receives room tax revenue from such a municipality is not using the revenue as required by statute.

The bill also authorizes any other person who is affected by tourism in that municipality to bring such an action. If the person bringing such an action prevails, the circuit court may order a municipality, commission, or tourism entity to comply with the statutes relating to the allocation and use of room tax revenue, may require a municipality to repay a tourism entity or commission any amounts that should have been so allocated, and may impose a forfeiture on a municipality for violating such statutes. If the court determines that a tourism entity is not using room tax revenue according to the statute, the municipality must create a commission to oversee the expenditure of room tax revenue. If the court determines that a commission is not in compliance with the statute, the elected official who appointed the commission members must dismiss all members of the commission and appoint new commissioners. The court must also award the prevailing plaintiff costs and reasonable attorney fees.