2019 Issue Brief
Preserving the limited use of local option sales to marketing
Position:
Support Minnesota Statutes 469.190 which limits the use of local lodging taxes to tourism marketing efforts. We oppose any changes to current law or the diversion of lodging taxes for any purpose beyond marketing.
Background:
Under existing law, a statutory or home rule charter city or town may impose a tax of up to three percent on lodging at a hotel, motel, rooming house or resort. The tax is limited to rentals of less than 30 days. The Attorney General’s office has issued several opinions clarifying the limited use of these funds. This revenue system benefits local attractions, as well as the broader community. By collecting these taxes from visitors, the burden on local tax payers for marketing is reduced. The broad pro- Minnesota tourism organization, Explore Minnesota Tourism Council, also supports our position.
Supporting Facts:
Current law requires 95% of the proceeds from these taxes shall be used to fund a local convention or visitor bureau for marketing and promoting the location as a tourist destination. Cities have proposed expanding the use of these funds for activities such as building or maintaining local hockey or sports facilities, seasonal decorations, welcome signs or community pools.
Tourism spending creates jobs, drives spending and has a positive return-on-investment. A 2016 report prepared on behalf of the Minnesota Office of Tourism assessed the economic impact of their advertising dollars spent in 2016. The study concluded for every $1 invested in their campaign, $98 in visitor spending was generated along with $9 in tax revenue benefit to Minnesota residents.
A second study by the Minnesota Office of Tourism and their Spring/Summer 2016 Tourism Ad Campaign identified the following positive economic benefits:
- The ad campaign generated 3.5 million trips to Minnesota, resulting in $389 million in additional traveler spending.
- Including indirect and induced impacts, this ad campaign promoting Minnesota generated $51.9 million in state and local taxes and $47.6 million in Federal taxes.
- Travel-driven state and local tax proceeds of $51.9 million helped offset the average household tax burden by $24 per household. That is, were it not for the 2016 tourism ad campaign, Minnesota households would need to pay $24 each to maintain the same level of government revenue.
2019 Issue Brief
Support Uniform Regulation and Taxation
Position:
Regardless of how or where a visitor books a stay in Minnesota it should be treated in a similar manner when it comes to taxation and regulation. We support legislation to require registrations, inspections and the collection of state and local taxes by online rental platforms or property owners.
Background:
We support the Minnesota Lodging Association’s position that there is widespread under collection of sales and lodging taxes associated with online short-term rentals and online travel agencies such as Orbitz, Expedia and Travelocity. Rentals from entities like AirBnb also often avoid regulations such as those required by the State Fire Marshal or Department of Health.
Supporting Facts:
- The short-term rental marketplace continues to grow. By avoiding or under-collecting the sales and local lodging taxes private renters are at a competitive advantage in the marketplace. This behavior allows these entities to take advantage of local services and marketing paid for by their competitors.
- Minnesota law requires the state sales tax paid on lodging sold by online travel agencies be paid on the entire amount charged to the guest rather than the wholesale amount paid to a lodging property. The law needs to be clarified so local option lodging taxes are collected in the same manner.
- National research indicates many of the listings on AirBnb in some markets are commercial operators rather than owner-occupied accommodations. In some instances, these locations have been found to be hotels without any regulation or oversight.
- Minnesota Tourism is currently a $15 billion industry, supports 265,000 full and part-time leisure and hospitality jobs paying $5.4 billion in wages in communities across the state. Minnesota Tourism generates nearly 18% of all state sales tax collections. Tourism spending creates jobs, drives spending and has a positive return-on-investment.
2019 Issue Brief
Increase Funding for Explore Minnesota
Position:
An increase in General Fund support of $___________ for Explore Minnesota would allow the state to compete with neighboring states in efforts to bring visitors and their dollars to Minnesota communities and attractions. Increased funding for Explore Minnesota should be directed to marketing and promotions activities. We also support a $1 million increase in the Event Grant Fund program which has proven to be popular for communities across the state and helped to bring several new community events to Minnesota.
Background:
Tourism advocates have maintained a goal of making tourism a $20 billion industry in Minnesota by 2020. The current budget for Explore Minnesota lags well behind the budget of neighboring states and further limits our ability to compete for tourism dollars and travelers. Increased spending on marketing and promotions supports a wide variety of Main Street businesses and supports jobs across numerous sectors.
Supporting Facts:
Minnesota Tourism is currently a $15 billion industry, supports 265,000 full and part-time leisure and hospitality jobs paying $5.4 billion in wages in communities across the state. Minnesota Tourism generates nearly 18% of all state sales tax collections. Tourism spending creates jobs, drives spending and has a positive return-on-investment.
A 2016 report prepared on behalf of the Minnesota Office of Tourism assessed the economic impact of their advertising dollars spent in 2016. The study concluded for every $1 invested in their campaign,
$98 in visitor spending was generated along with $9 in tax revenue benefit to Minnesota residents.
A second study by the Minnesota Office of Tourism and their Spring/Summer 2016 Tourism Ad Campaign identified the following positive economic benefits:
- The ad campaign generated 3.5 million trips to Minnesota, resulting in $389 million in additional traveler spending.
- Including indirect and induced impacts, this ad campaign promoting Minnesota generated
$51.9 million in state and local taxes and $47.6 million in Federal taxes.
- Travel-driven state and local tax proceeds of $51.9 million helped offset the average household tax burden by $24 per household. That is, were it not for the 2016 tourism ad campaign, Minnesota households would need to pay $24 each to maintain the same level of government revenue.
2019 Issue Brief
Support Minnesota’s Limitation of Schools Starting Classes Prior to Labor Day
Position:
We recognize the need for a quality school system, however we support maintaining Minnesota’s prohibition of school districts starting classes prior to Labor Day.
Background:
We support Minnesota’s traditional summer and believe Minnesota can still maintain and develop strong academic standards without jeopardizing Minnesota traditions such as the State Fair, trips to local resorts and visits to community attractions. The current law lengthens the tourism season which benefits local units of government in the form of taxes collected, benefits tourism businesses by extending their opportunities for sales and school districts which receive local property taxes.
Supporting Facts:
A 2012 study by the Center of Tourism at the University of Minnesota found the following:
- Post Labor Day school start increases the likelihood that families report at least one trip of two or more nights away from home in the months of August or September by 50%.
- The likelihood of reporting such a trip in any month between May and September is 30% higher because of schools starting after Labor Day.
Many state-wide industries depend upon employees that are available due to the current state law. Those industries include tourism, agriculture, 4-H, State Fair, landscaping and farming. The current law also helps students by extending their opportunities earn money for college or to supplement a family’s income.
Minnesota Tourism is currently a $15 billion industry, supports 265,000 full and part-time leisure and hospitality jobs paying $5.4 billion in wages in communities across the state. Minnesota Tourism generates nearly 18% of all state sales tax collections. Tourism spending creates jobs, drives spending and has a positive return-on-investment.
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