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Midway faces possible loss of resort‑tax revenue; city seeks ways to preserve collections
Summary
Midway officials said state tax staff have signaled the city may not be permitted to collect the local resort tax after July 1 unless the city can document eligible lodging units to the tax commission’s satisfaction.
Midway officials warned the council that the city’s resort‑tax revenue is at risk unless staff can substantiate the lodging unit counts the state requires. City staff reported notice from the state that Midway would not be permitted to collect the resort tax after July 1 unless the municipality demonstrates it meets statutory criteria for eligible resort lodging.
The potential budget impact is significant. Staff told the council the city could lose roughly $1.3 million in revenue that feeds general‑fund transfers and capital programs if the resort tax cannot be continued at current levels. “I’m really, really hoping there's some miracle way we cannot lose that,” one councilor said.
Why it matters: Resort‑tax revenue is a major source of discretionary funding for Midway. Losing it would force reductions in spending or reallocation of capital plans. Staff repeatedly emphasized the time pressure: the city must produce defensible counts and documentation before the state’s July 1 deadline.
City staff described efforts and obstacles. The city engaged a consultant with past experience to reconcile different counting methods (beds, bedrooms, units and — the consultant suggested — pillows) and to prepare the submission to the state tax commission. According to the meeting record, the consultant reviewed Midway’s numbers informally but declined to sign a final report supporting the submission, saying some units should be submitted as specially designated lodging categories and that the tax commission would need to evaluate those classifications individually.
Councilors and staff discussed specific projects that could add lodging capacity and thus influence counts, including Homestead (condominiums not yet recorded), Omni‑Ali and other resort projects. Staff also noted that county‑level estimates had been higher in prior years and that the county’s revised projections reduced budgeted expectations for Midway’s transient‑room tax receipts.
Staff presented historical transient room tax receipts and said collections dipped in the last reported year but are estimated to recover in the current fiscal year. The council asked staff to pursue every feasible administrative remedy — including revisiting unit classifications with the tax commission and identifying newly available nightly‑rental units — while also coordinating with developers whose projects may bring new taxable beds online.
Next steps: City staff will pursue follow‑up with the tax commission, coordinate with developers on unit status (condominium plats and licensing), and perform a more granular audit of listings on Airbnb/VRBO and other booking channels. Council members volunteered to assist with a “deep dive” of specific developments. The city also said it will continue to explore legal and administrative remedies to preserve at least part of the revenue stream.
