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The rundown on room taxes, and why there's a lawsuit between Mount Pleasant and Real Racine


What are room taxes?
Since its establishment in 1983, Real Racine has been, in large part, funded by hotel room taxes — specifically on visitor stays of fewer than 30 days by hotels and lodgers in Mount Pleasant, Racine, Caledonia, Yorkville, Waterford and Burlington.
Those municipalities pay into Real Racine differently, depending on their individual contracts: Yorkville pays 90%; Caledonia 85%; Sturtevant pays 75%, as Mount Pleasant used to.
Confusion and a legal gray area surround what hotel room taxes are exactly, including who actually is paying those taxes, who gets to receive the funds and what they can be used for.
First, a hotel room tax is a tax of up to 8% that municipalities are allowed to collect when someone stays at a hotel in the area. The hotel then pays those taxes they have collected to the municipality. ....

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Real Racine suing Mount Pleasant for alleged illegal spending of hotel tax revenue


MOUNT PLEASANT — Real Racine, Racine County’s visitor’s bureau, is accusing the Village of Mount Pleasant of illegally spending the hotel room taxes it has collected this year.
Under state law, municipalities are allowed to collect a tax of up to 8% on hotel room rentals. Of that revenue, at least 70% must be spent on “tourism promotion and tourism development,” with the rest being able to be added to a city’s/town’s/village’s general fund.
At the end of 2020, the Village of Mount Pleasant ended its contract with Real Racine — in which it paid 75% of its room taxes to the visitor’s bureau — but has continued collecting room taxes. ....

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