Hospitality tax headed to Senate
BEMIDJI – The debate over a hospitality tax in Bemidji is heating up.
In the weeks since a bill allowing the city to impose the tax was heard in the state House, boardroom discussions and letters to the editor in the Pioneer have focused on the tax.
And on Wednesday morning, the proposal will take another step forward when its Senate companion gets a hearing in the powerful taxes committee, chaired by Sen. Rod Skoe, DFL-Clearbrook.
The bill, authored by state Sen. Tom Saxhaug, DFL-Grand Rapids, would allow the city to impose up to a 1 percent tax on restaurant and hotel customers’ bills. The money would go to operations, maintenance and capital improvement costs of the Sanford Center, which currently receives a $400,000 annual subsidy from the city.
City manager John Chattin has said the tax would allow them to reduce city property taxes, and is projected to generate $500,000 a year if set at the 1 percent level.
During a March 13 hearing in the House local and property tax division of the taxes committee, Chattin said more than 130,000 people attended events at the center last year.
“It also brings a lot of extra money into the community, which is one of the reasons we wanted to build it in the first place,” he told legislators. “A lot of that money gets spent in local hotels and restaurants.”
The House bill is authored by Rep. John Persell, DFL-Bemidji.
Rep. Tim Faust, DFL-Hinckley, said during the hearing that the tax appeared to be focused on property taxes in Bemidji.
“I don’t understand why someone from my community that goes to your community should now help pay the property tax responsibility in your community,” Faust said.
Chattin countered the hospitality tax is a “matter of fairness.” He noted about half of the real market value in Bemidji is exempt from paying property taxes, one of the highest rates in the state.
“Why should such a small portion of citizens in the city of Bemidji be subsidizing a regional center?” Chattin told legislators. “We are servicing a wide region. It doesn’t seem fair to take less than half … of the property in Bemidji and say, ‘You have to pay all of that.’”
Local hotel developer Rich Siegert said, however, the tax is aimed at the wrong people. He added that less than 5 percent of his total gross sales per year are being generated by events at the center.
“There are better ways to tax,” he said.
Even before the companion bill was heard in the state House, the Bemidji Area Chamber of Commerce asked members to contact legislators in opposition.
The chamber, as well as Visit Bemidji, has voiced opposition to the tax. Chamber president Lori Paris has said previously that more options need to be explored before a hospitality tax should be considered.