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Lake County explores 4 percent lodging tax

The Lake County Board of Commissioners recently decided to form a committee to explore the implementation of a countywide 4 percent lodging tax.

The idea sprang from a discussion with Two Harbors Area Chamber of Commerce President Janelle Jones at a board action meeting Tuesday, Feb. 26, in Two Harbors.

The proposed 4 percent tax would be dedicated in two ways: 3 percent would go to funding countywide marketing campaigns, while 1 percent would go back directly to the communities to fund festivals and events.

This proposed distribution model mirrors the bordering Cook County's lodging tax allocation model.

Jones supported her proposal for the tax by predicting it would likely increase tourism income throughout the county.

"For some perspective, let's look at the gross amount of money that came in due to tourism in Lake County — about $47 million," Jones said. "Meanwhile, Cook County brought in about $72 million. That's the separation. I want to bridge the gap between our counties and bring us up to a level playing field."

Cook and St. Louis counties have implemented lodging taxes, while the countywide rate in Lake has remained at zero.

"When I see an almost $30 million gap between us and Cook County, there's definite room for improvement," Jones said. "Just last week, we put out a video promoting Two Harbors as a destination and we've had 67,000 people look at it in the past week. I want to do that for the whole county, but we need the money to do it. We need the dollars to tell our story."

This is not the first time the board has broached this topic. Commissioner Rick Goutermont provided the board with some background on the issue.

Currently, Two Harbors and Silver Bay have their own 3 percent lodging taxes, with 0.5 percent of Two Harbor's tax dedicated to the Edna G. tugboat fund. Beaver Bay does not have a lodging tax.

"The last time we discussed this, we had all different members on the board, aside from myself," Goutermont said. "Every time it came up and we were lobbied by our constituents to support this, and to make it happen countywide, we didn't have the authority to do that. All we did was to encourage the townships and municipalities to take advantage of this tool that was available to them, so that they could get the money and use it to attract other people to our area."

Goutermont stated the board's previous position with the tax was in support of it, and he renewed his own support of the tax — as long as it is modeled after Cook County.

"I've been pretty vocal about this all along. For me to support it, it's got to be dang close to what Cook County has," he said. "I don't want to do something new here. I don't think we need to reinvent the wheel when we've seen it work further up the shore."

To keep the issuance of funds fair, the county called for the creation of an oversight committee for the proposed tax. The committee will consist of advisers from each of the communities as well as a couple of commissioners and the county administrator and auditor.

As for next steps, Jones has already started the ball rolling in the legislative direction. Since this tax would require legislative approval, Jones spoke with Sen. Tom Bakk, who co-drafted a proposal. Jones was also called on to testify on behalf of the proposal in front of the Minnesota House of Representatives Property and Local Tax Division on Monday, Feb. 25.

Teri Cadeau

Teri Cadeau is a reporter for the Lake County News-Chronicle. 

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