Under the room tax law, does a tourism commission have the ability to contract with a municipal agency, such as an economic development, community development, or tourism department, for tourism marketing services in the absence of a tourism entity within the community? 

Yes, a tourism commission may contract with a municipal agency such as an economic development, community development, or tourism department for tourism marketing services in the absence of a tourism entity within the community. While the room tax law is confusingly written and recent changes have not added clarity, a tourism commission has discretion regarding what organization to contract with for tourism marketing services in the absence of a tourism entity.  

Under the room tax law municipalities have always had the option of creating a tourism commission to oversee the spending of room taxes collected by the municipality.  2015 Act 55 requires municipalities, beginning January 1, 2017, to forward the 70 percent of room tax revenue required to be spent on tourism promotion and tourism development to a tourism entity or a tourism commission.  Under prior law, municipalities had the option of forwarding room tax revenues to tourism entities or tourism commissions, but were not required to do so.  

The provisions in the room tax law relevant to your question are set out below:

Sec. 66.0615(1m)(b)1. provides that  “If a single municipality imposes a room tax under par. (a), the municipality may create a commission under par. (c). The commission shall contract with another organization to perform the functions of a tourism entity if no tourism entity exists in that municipality.”

Sec. 66.0615(1m)(d)3. states that   “A commission shall use the room tax revenue that it receives from a municipality for tourism promotion and tourism development in the zone or in the municipality.”

Sec. 66.0615(1)(fm) defines “tourism promotion and tourism development” to mean:
“any of the following that are significantly used by transient tourists and reasonably likely to generate paid overnight stays at more than one establishment on which a tax under sub. (1m) (a) may be imposed, that are owned by different persons and located within a municipality in which a tax under this section is in effect; or, if the municipality has only one such establishment, reasonably likely to generate paid overnight stays in that establishment:
1. Marketing projects, including advertising media buys, creation and distribution of printed or electronic promotional tourist materials, or efforts to recruit conventions, sporting events, or motorcoach groups.
2. Transient tourist informational services.
3. Tangible municipal development, including a convention center.”

Together these provisions state that a commission must use room tax revenue for tourism promotion and tourism development and must contract with a tourism entity or, if none exists, another organization to market the community to tourists and other travelers.  The room tax law does not define the word “organization.”  Merriam-Webster’s dictionary defines “organization” as “a company, business, club, etc., that is formed for a particular purpose.”    

An organization could be almost any public or private entity that is created for a particular purpose.  If one of the goals or functions of a municipal department is marketing and promoting the community to tourists and recruiting conventions, conferences and other events, then a tourism commission may contract with such a municipal agency for tourism marketing services in the absence of a tourism entity.