Wisconsin Budget Deal Includes Anti-Homesharing Provision

As Wisconsin lawmakers prepare to vote on a long-overdue state budget, someone has slipped in a measure making it harder for people to rent their homes via platforms like Airbnb.

The last-minute addition would prohibit municipalities across Wisconsin from banning rentals of more than one week, leaving those localities to do as they please with shorter-term rentals. The same provision would impose new tax and regulatory burdens on renters and the online platforms they use, requiring homeowners to register with the state (and, if required, their local government too) and demanding that platforms like Airbnb collect and pay hotel taxes.

Under current law, that tax burden falls on the property owner. An individual hotel or rental property owner has to pay the tax bill, not the online platform that connects tourists, renters, or guests with hotels and rental landlords.

Matthew Kiessling, vice president of the Travel Technology Association, says Wisconsin short-term rental owners and hosts deserve a full and transparent discussion of the issues. "Wisconsin's travel and tourism industry has much to gain by getting this right," he tells Reason. "That isn't going to happen by shoehorning new regulations into the state's budget at the eleventh hour."

Airbnb and other short-term rental platforms have sought state-level preemption legislation in other states to keep municipalities from banning such rentals. Hotel lobbyists and trade associations have pressured local governments to prohibit Airbnb with questionably accurate claims about how short-term rentals can damage neighborhoods and small towns.

In some tourism-heavy communities in the rural parts of the state, hotels and lodges have every reason to pressure local governments to ban their competition by shutting down short-term rentals. A statewide preemption law would prevent that, but the measure included in the state budget falls short of what Kiessling says is necessary to protect short-term rental hosts and tourists who might prefer an Airbnb to a large hotel.

Local governments already set zoning rules and have other ways to regulate what homeowners can do with their property. If renters are violating noise ordinances, committing crimes, or otherwise endangering the lives and property of other people, they should be held accountable for their actions. Outright bans serve only to prohibit homeowners from earning extra cash and to funnel business towards established hotels, lodges, and rental communities.

So realtors are excited about the provision. "It's a huge victory for homeowners who want to rent out their homes," Tom Larson, a Wisconsin Realtors Association lobbyist, told the Milwaukee Journal Sentinel. More accurately: It's a huge victory for homeowners who rent their homes for weeks at a time or for the whole summer. Those rentals would be protected under the language inserted in the state budget, while short-term rentals (the average Airbnb rental is about three days) would not.

In a letter to legislative leaders, the Travel Technology Association argues that the state budget language provides, at best, an opportunity for every municipality in Wisconsin to ban or prohibit short-term rentals of less than seven nights in their community. At worst, it proactively encourages municipalities to take such action.

There's still time for a reversal. The Journal Sentinel reports today that the House would pass the bill even though the Senate has not yet confirmed it has the votes to pass the same proposal. If the bill makes it to Gov. Scott Walker's desk, he could use his veto power to remove certain line items from the budget before signing it.

Kiessling says the governor should do that if he gets the chance. "The included language essentially creates a new regulatory structure for short-term rentals, a non-budgetary issue, and should instead be addressed in stand-alone legislation," he says.