Mequon Considers Lodging Tax To Fund Tourism, Festivals & Rec

Taste of Mequon

A new tax being considered in Mequon could eventually create a significant new pool of money for festivals, recreation, tourism marketing and community improvements.

The City of Mequon is considering a 6% lodging tax on hotel stays and short-term rentals, with 70% of the proceeds dedicated to tourism promotion and development and 30% retained by the city for general municipal purposes.

City projections estimate that the tax could generate approximately $649,000 for tourism development between 2027 and 2031, along with another $278,000 for Mequon’s general fund over the same five-year period.

That tourism money could potentially support everything from festivals and recreational events to improvements connected with the Mequon Commons plan.

For families who already attend events such as Taste of Mequon, Fun Before the Fourth or other Mequon-area community events, the proposal could eventually mean more funding dedicated specifically to attracting visitors and expanding local programming.

What exactly is being proposed?

The draft ordinance would impose a 6% tax on the gross receipts from short-term lodging in Mequon.

That includes hotels, motels, short-term rentals and lodging booked through online marketplaces.

Under the proposal:

70% of lodging-tax revenue would go to tourism promotion and development. 30% would remain with the city for general municipal purposes. The tax would apply throughout the entire City of Mequon.

It would be paid by visitors purchasing lodging rather than being added directly to residents’ property-tax bills. The idea has been under discussion for more than a year.

Mequon’s Common Council discussed possible lodging-tax revenue during financial workshops in July 2025 and June 2026 as the city looked for additional revenue sources. A hotel redevelopment analysis by REVPAR Inc. also examined how a lodging tax could work locally.

The Economic Development Board then formally recommended a 6% lodging tax on June 2. That recommendation passed without opposition.

At that June meeting, city staff emphasized several reasons for supporting the proposal:

• creating a new revenue source;

• reinvesting money into tourism;

• supporting local businesses;

• attracting more local activities;

• and bringing Mequon in line with practices used by other communities.

Staff also noted that the tax would be generated by people staying overnight in Mequon rather than by residents directly.

How much money could it generate?

The city estimates a five-year tourism-development total of roughly $649,000 from 2027 through 2031.

Another approximately $278,000 could be retained by Mequon’s general fund. That would create a much larger dedicated tourism budget than Mequon currently has.

City staff has specifically identified opportunities to spend tourism revenue on things such as:

• festivals;

• sports and recreational events;

• tourism marketing;

• partnerships with the Chamber of Commerce;

• and physical improvements or programming connected with the Mequon Commons Master Plan.

That means the impact could eventually extend beyond hotel guests and into public spaces and community events used by local residents.

Could this mean more festivals?

Potentially.

Mequon already supports several community events, including Taste of Mequon, which draws thousands of visitors to the City Hall area for food, live music and family activities.

Other Mequon-Thiensville traditions include Fun Before the Fourth, LIONFEST and community programming around parks and public spaces.

The June Economic Development Board discussion specifically noted that existing festival contributions had remained relatively consistent while public and private interest in tourism efforts had increased.

A dedicated tourism fund could potentially allow Mequon to increase support for existing events or develop new attractions designed to bring visitors into the city.

That doesn’t mean any particular festival has been promised additional money yet.

Those spending decisions would still need to be made through a future tourism budget.

What about Mequon Commons?

This may be one of the more interesting pieces of the proposal.

City staff specifically cited the Mequon Commons development as an area where tourism money could potentially be used.

Mequon has already awarded a contract for the first phase of design and development planning for Mequon Commons, a larger effort involving the municipal campus and surrounding public space.

The lodging-tax discussion suggests tourism revenue could eventually help fund physical improvements or programming associated with that plan.

Exactly what that means has not yet been determined.

That could include public-space enhancements, events or other tourism-related amenities, but the city has not approved a specific list of projects.

Who would control the tourism money?

Under the proposal, Mequon’s existing Economic Development Board would be transformed into the Economic Development and Tourism Board.

That board would take on the responsibilities required of a tourism commission under Wisconsin law.

The proposed board would include nine voting members, including at least one representative of Wisconsin’s hotel and motel industry.

Among its responsibilities would be:

• recommending tourism spending;

• tracking how lodging-tax revenue is used;

• measuring its impact on paid overnight stays;

• preparing an annual tourism budget;

• and reporting expenditures to city committees.

The city could also contract with outside organizations to perform tourism-promotion work.

The Sept. 29 packet specifically identifies potential partners including the Mequon-Thiensville Chamber of Commerce, Ozaukee Economic Development and the Village of Thiensville.

That raises another interesting question: whether the tax could lead to more coordinated Mequon-Thiensville tourism promotion rather than each community marketing events independently.

What happens next?

The Sept. 29 city staff report lays out a tentative path. If recommended by the Economic Development Board, the proposal is expected to move to the Finance & Personnel Committee on Oct. 13.

The city then anticipates formal Common Council action in November.

If approved, the lodging tax is targeted to take effect April 1, 2027.

Mequon’s meeting calendar currently lists a Finance & Personnel Committee meeting and Common Council meeting for Oct. 13, although the detailed lodging-tax agenda for that meeting has not yet been posted.

For families looking for things to do in the community now, explore our full Mequon family guide, our Taste of Mequon guide and our guide to Fun Before the Fourth.

You can follow upcoming Mequon meetings and the lodging-tax proposal through the City of Mequon meeting portal.