By Shereen Siewert
Wausau officials are considering terminating their contract with the Convention and Visitors Bureau after discovering the organization’s director collected thousands of dollars in lodging tax from Expedia, money that normally would have directly gone to the municipalities themselves.
The Marathon County Sheriff’s Department on June 17 opened an investigation into CVB Executive Director Richard Barrett’s actions as a possible “theft by fraud,” according to the incident report. But the detective in the case concluded that there was a “lack of communication and coordination” between Barrett and six municipalities including Mosinee, which terminated its agreement with the CVB more than three years earlier, and Wausau.
City officials will take a closer look Thursday in Wausau, while Rothschild has already terminated its agreement with the CVB “based on their inability to fulfill contract obligations,” said Rothschild Administrator Gary Olsen.
Wausau Mayor Katie Rosenberg said in-house conversations surrounding what to do about a sharp expected decrease in room tax dollars began about two weeks after she was sworn into office, while the state was still under Safer at Home orders.
“The city collects monthly and March and April were very tough months for our innkeepers and hotel owners,” Rosenberg said. “The agreement we have with the Convention and Visitors Bureau is that Wausau will keep around $400,000 of the room tax dollars collected in 2020 and the rest will go to the Room Tax Commission, who will then in turn remit funds to the CVB and other organizations requesting funds for tourism.”
Based on those projections, Rosenberg said, she and Finance Director MaryAnne Groat concluded that the city might not reach $400,000 in room tax collections in 2020, let alone have any funds leftover for the Room Tax Commission.
As a courtesy, Rosenberg said, she asked Groat to speak with Barrett and let him know that the city wouldn’t remit payment to anyone until after talking with the Room Tax Commission, once non-essential meetings restarted.
Normally, the city would collect payment and pass excess funds to the Room Tax Commission, which then directs payments to the CVB and other organizations. But in June, when the city didn’t get an expected payment from Expedia, Groat discovered that Expedia had remitted the gross amount of Wausau’s room tax dollars collected to the CVB, leaving Wausau out of the process, Rosenberg said.
While investigating the missing payment, city officials learned that Barrett, as CVB executive director, contacted Expedia directly and offered to collect on behalf of the city and several other municipalities, Rosenberg said.
“We had no such agreement because it bypasses our process,” she said.
Wausau City Council member Lisa Rasmussen, who has been on the city’s Room Tax Commission since its inception, said that at no time was the city interested in outsourcing its fund management to the CVB, something that Rasmussen said was made clear to Barrett.
“As I recall, the CVB has been seeking to manage the city’s room tax money back to day one when the law changed to require a commission or tourism entity handle future allocations,” Rasmussen said. “From the beginning, Wausau opted to form it’s own commission, choosing not to allow CVB to manage the funds. There should have been no misunderstanding of the fact that the CVB was not authorized by the city to collect additional funds in this situation. I look forward to the upcoming discussion and thank our Finance Director for following up and discovering this issue.”
Barrett also collected room tax revenue on behalf of Mosinee, which had already discontinued participating with the CVB in December 2016 in favor of a local tourism commission, Mosinee Administrator Jeff Gates said.
“The CVB recently forwarded to the City room tax revenues that were incorrectly tendered to the CVB by a marketplace provider,” Gates said, in an email to Wausau Pilot & Review. “The City has contacted the marketplace provider to ensure that future City room tax payments are submitted directly to the City.”
Gates didn’t specify how much money was involved in the Mosinee transaction. But in Rothschild, officials have recouped $12,790.99 from the CVB, money that should have been paid directly to the village from Expedia, Olsen said.
In Wausau, Mayor Rosenberg said she met with Barrett at the end of June, when he offered a check for partial payment of the $19,987.99 in funds at issue. The city received the balance on July 15.
The criminal investigation into Barrett’s actions is closed, but Rosenberg said she is frustrated that she wasn’t interviewed during the process.
“I realize that all organizations and units of government are under tremendous strains right now but I was elected to provide oversight of our city’s tax dollars and processes and no organization has the right to subvert the democratic process,” Rosenberg said.
Barrett did not respond to a request for comment for this story.
A joint Finance Committee and Room Tax Commission meeting is set for 5:30 p.m. on Thursday, July 16 at City Hall, 407 Grant St., Wausau.