Madison is a wonderful city, as everyone who lives here can attest. It even has a reputation around the country as a vibrant, safe place to live with plenty of jobs, to boot. In fact, we consistently place highly in rankings of best small cities in the U.S. The secret’s out — Madison’s a pretty cool place. Considering this, it seems a bit odd that Madison Mayor Paul Soglin is pushing to spend $50,000 on a music video promoting the city. However, further examining the issue of this proposed music video helps to illustrate a broader problem with Wisconsin’s room tax system.
To get an idea of why Soglin wants this video made, it’s important to understand where the money for it would be coming from. In Wisconsin, municipalities are allowed to levy a “room tax” on hotel room rentals. According to state law, however, a certain percentage of the revenue that a city raises from room taxes must go directly toward promoting tourism in that city.
At first glance, this seems like a bit of an odd rule — and it is. There is a reason for it, though. The state figures that any damage done by taxing tourism can at least be partly repaired by funneling some of the room tax revenue back into promoting tourism.
This information raises a couple of questions about the proposed music video. First of all, is a music video really the best way to spend $50,000 promoting tourism in Madison? Let’s suppose, generously, for a moment that it is. This would likely suggest that Madison probably doesn’t need to continue to tax rooms at its current rate. The city would be made much better off by simply lowering its room tax than by making a music video.
Now, let’s suppose, a little more realistically, there is a better way to spend $50,000 promoting tourism in Madison than making a music video. How could we spend the money more effectively? One obvious way, if we assume that most people already know about Madison, would be to put the extra money toward improvements on Monona Terrace, which falls under “promoting tourism” as defined by state law. This would make Madison a better city for tourism by giving people more of an actual reason to come here — not that a music video wouldn’t do the same, of course.
While certainly a better option than a music video, Monona Terrace seems to be doing quite well as it stands right now. This, then, brings us back to the same question: Do we really need the money from this room tax in the first place?
This is actually a complicated question because some of the money from the room tax can be used for things besides tourism, and the city is definitely in need of any money it can get its hands on right now. However, if we’re seriously contemplating using the money to make a video, it’s probably a good sign that we don’t need the money in the first place. Reducing Madison’s room tax from 9 percent — there is only one Wisconsin city with a higher rate — could help to boost tourism on its own.
However, this still isn’t a great option, since it entails decreasing general tax revenues, as well. Perhaps the real problem behind the music video idea is that the state requires cities to spend a portion of the room tax revenue on tourism in the first place. There are certainly arguments to be made for allowing municipalities to spend room tax revenue however they see fit (although lobbyists for hotels might not approve). However, that’s a topic for another column.
Look: Madison doesn’t need a music video. We really, really don’t. If we have to spend $50,000 on something tourist-related, I’m sure we can find something better to spend it on than a music video. We’d be hard pressed to find something worse. However, the real issue here is that the city ended up with $50,000 it doesn’t need, while simultaneously having to slash its budget and hike bus fares. Clearly, there’s something not right with this system.
Joe Timmerman ([email protected]) is a sophomore majoring in math and economics.