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Hospitality tax left out of Senate bill

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BEMIDJI – A bill allowing the city of Bemidji to impose a tax on purchases at restaurants and hotels to pay for Sanford Center operations has hit a snag at the state Legislature.

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The hospitality tax proposal was not included in the Senate’s omnibus tax bill, a large collection of tax provisions rolled into one large bill that was released Tuesday morning. 

Senate Taxes Committee Chairman Rod Skoe, DFL-Clearbrook, said in a phone interview Tuesday that the main issue with the proposal was “community consensus.”

“We generally require the chamber of commerce, the business community and the city council to come kind of hand-in-hand and request those things,” Skoe said. “When there’s divisions within the community, we like to see the city work that out before they come down here.”

The Bemidji Area Chamber of Commerce has not taken a formal position on the proposal. Chamber president Lori Paris said there are members on both sides of the issue.

The city has been looking to get permission from the Legislature to impose up to a 1 percent food, beverage and lodging tax to help pay for Sanford Center operations, maintenance and future capital improvements. The city budgeted $400,000 for the facility in 2013.

The city council recently approved a resolution stating it would lower its property tax levy by that amount otherwise needed for the Sanford Center if the hospitality tax passes.

Skoe said the lodging tax included in Bemidji’s proposal was also an issue.

“The purpose of the lodging tax is for the promotion of the area, to bring more business into the area,” Skoe said. “We think that’s the appropriate use of the lodging tax.”

He added, however, that there are other provisions in the Senate’s tax bill that will help cities like Bemidji, including changes to the Local Government Aid program and a state sales tax exemption to cities and counties. The bill would give Bemidji $440,000 more in LGA than it is projected to receive in 2014 under current law.

“I think it’s a pretty good bill,” Skoe said.

Bemidji Mayor Rita Albrecht agreed.

“There’s plenty to like for the city of Bemidji in Sen. Skoe’s bill,” Albrecht said.

As for the hospitality tax, however, she noted there is plenty of debate yet to come.

“For me, I think we’ll just let it play out in the Legislature and see what happens,” Albrecht said. “If it passes, we’ll decide if we want to implement that. But if it doesn’t pass, we’ll step back and try and work hard to make the Sanford Center as successful as we can without the hospitality tax.”

The House’s tax bill includes the hospitality tax and could come up for a floor vote in the coming days. Once the tax bills are voted off their respective floors, lawmakers from both chambers will hash out differences in conference committee.  

Sen. Tom Saxhaug, DFL-Grand Rapids, said Tuesday that having the hospitality tax in the House bill is “not a bad position to be in” heading into conference committee. 

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John Hageman
John Hageman covers local business and Grand Forks' legislative delegation. Get more business news at aroundtown.areavoices.com. 
(701) 780-1244
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