Taking a Closer Look at the 2% Lodging Tax

As the election date approaches, the arguments for and against the 2% lodging tax have resurfaced. The article in the Cowboy State Daily covers how the tax works on a state level and the Cody Enterprise lays a good a basis for understanding the basic structure of the tax and Park County Travel Council’s oversight of the revenue from the lodging tax.

Recently, the annual report from Park County Travel Council (PCTC) came in the mail to all residents of Park County. It shares where and how the money collected from the tax gets distributed. You can also find it here online.

Nuts and Bolts

If someone stays in a hotel, vacation rental, or other type of lodging, they are charged a 7% lodging tax. From that seven percent, five percent is collected by the state. The state retains three percent of that amount and gives two percent back to the counties. The counties can raise another two percent to keep locally, and Park County has chosen this route in the past. We are voting on whether or not to continue to allow Park County to collect the two percent. This is not an additional or new tax but would allow Park County to retain the same level of funding.

Park County Travel Council is a Joint Powers Board comprised of ten volunteer board members. Four members are appointed by Park County Commissioners, two by the Cody City Council, two by the Powell City Council, and one by the Meeteetse Town Council. A representative from the Wyoming Tourism Board or a designee also serves on this board. Basically, PCTC’s mission is to administrate the lodging tax money to promote Park County as a vacation destination and invite visitors to the area.

What if voters do not approve the tax? What does that look like?

If the 2% local lodging tax does not pass to continue funding at its current level, PCTC would be forced to effectively defund many grant programs or eliminate them as the added funding would disappear. Operating costs and the marketing budget aren’t as flexible due to being higher priorities.

The Visitor Centers would likely be most affected. Right now, that tax revenue pays for all staff and much of the operations at the Cody Visitor Center. It funds all of Powell’s Visitor Center as well as Meeteetse’s. It also funds the marketing efforts of the East Yellowstone Valley Chamber of Commerce. Would these still exist without that grant money? How effective would they still be in driving the visitors to local businesses?

The best-case scenario plays out with grants only cut in half. The rodeo would need to cut their budget by nearly $14,000. The museum would see a shortfall of a little over $15,000. The Heart Mountain Interpretive Center would lose $9,000. The airport would lose $12,500. There would also be cuts for the Homesteader Museum.

These entities would need to make significant cuts in their budgets or do some serious, time-consuming fundraising to fill that gap.

Without the 2% local lodging tax revenue, it would certainly hinder the efforts of Park County Travel Council as a whole. Like it or not, we are a tourist town on the edge of Yellowstone, and we need the funds to promote the area.

Less destination marketing funds available and reduced grants mean the other gateway communities for Yellowstone will have a greater advantage. People may pass through but not stay in Cody.

Concerns Raised

The arguments against the tax revolve around a disagreement about the effectiveness of PCTC’s efforts over the past few years. Overall, it calls for more transparency and a means for the Travel Council to incorporate more local sentiment in decisions. Let’s take a closer look at what some research found out about the specific concerns.

One concern is that the tax hits Wyomingites – particularly those traveling in-state for business and school athletes traveling to other towns to compete. While this is obviously a smaller percentage of the overall revenue, it’s a good point. Right now, the state law allows a tax exemption for youth organizations, schools, colleges, and 501c3s. However, that does not include the parents, those not directly involved in these organizations, or in-state business travelers. The only way to change this is at the state level. The 2% local lodging tax can’t affect that change.

Another concern raised says that smaller businesses are looking for help in many ways. The concern stated that more workers should be hired and that there should be better service overall for visitors. But is that the purpose of the Travel Council? Or is that the job of the Chamber, the Wyoming Business Council, and Forward Cody? Perhaps this concern is asking for more grants to be given locally. If so, this is a strong argument for voting for this two percent tax.

It’s also been suggested that PCTC should consider advertising to out-of-state hunters in Park County. In looking at this closer, one must consider the luck of the draw and the number of licenses available. Would marketing efforts be cost-effective here when getting an out-of-state tag is so hard already? But beyond bringing more outside hunters to Park County, what other types of recreation opportunities have the resources to expand in the area without damaging the area?

Damage to Yellowstone with increased visitation is another concern. Yellowstone may top 5 million visitors this year. Superintendent Sholly discussed this topic at the May Parks Day Luncheon and hinted at future discussions about limiting entrance numbers. How close or far into the future this discussion will happen is yet unknown. It’s a complex issue that affects all of the gateway communities. PCTC works to drive visitors to Park County. The better they can do that, the more travelers will use the services outside the park and lighten the impact in Yellowstone.

The implication of this concern suggests the 2% tax significantly impacts the visitation volume. Montana’s extremely large budget for tourism far outweighs what Wyoming spends, let alone the 2% local lodging tax in Park County. It would be nice if we had that much impact on Yellowstone visitation, but that’s not the case.

The Bottom Line

Residents have differing opinions on how PCTC operates. Some would like to have more of a say in the process of promoting our area. It would behoove PCTC to work on finding more ways to communicate.

But is defunding the local attractions the best way to get PCTC to hear residents’ viewpoints? Or is it cutting off our nose to spite our face? Given that this tax is mostly paid for by visitors to create more vibrant communities in Park County, continuing the tax makes the most sense to continue to support local attractions and drive visitors to local businesses.

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