ELY — Two local tourism business owners challenged the city council Tuesday evening over their representative’s failure to follow council direction on lodging tax funding, adding a new layer of tension to an ongoing dispute over how those dollars should be spent.
Jason Zabokrtsky, owner of Ely Outfitting Company, and Edith Renner, owner of Motel Ely, warned that reducing funding to the Ely Area Tourism Bureau could harm the local economy and ultimately worsen the city’s budget challenges.
“I’m very concerned that by reducing funding to the tourism bureau, the marketing impact of lodging tax dollars will be reduced, and the benefits of tourism in this area will be negatively affected,” Zabokrtsky told the council.

Representative didn’t
follow council direction
Renner raised pointed concerns about Paul Kess, the city’s representative on the Ely Area Lodging Tax Joint Powers Board, saying he failed to follow the council’s explicit direction in a vote the previous week.
During an October meeting, the council had passed a resolution directing Kess to vote for a plan that would fully fund the tourism bureau’s $315,000 request, as well as funding requests from the city and chamber of commerce. However, at the Joint Powers Board meeting, Kess supported a compromise that gave all three entities two-thirds of their requested allocations.
“He did not present that plan, and he did not vote for that plan. So he failed to follow your direction,” Renner said. “I’m a little concerned that he shouldn’t be going with his gut when you guys sent someone to represent you.”
Renner said Kess had reportedly consulted with the city clerk and a council member who told him to use his discretion, but she questioned what the council’s role is if their representative doesn’t follow their direction.
She suggested the position should either go to a city council member or be opened to the general public, adding that she would be interested in serving on the board herself.

Concerns about precedent
and purpose
Both speakers emphasized their opposition to what they characterized as a dramatic shift in how lodging tax dollars have historically been used.
State law requires that 95 percent of lodging tax proceeds go to the local tourism bureau. The Joint Powers Board has historically followed this by funding the tourism bureau with most of the available dollars.
But recent requests from the city of Ely for up to $20,000 to help cover maintenance and operations of a new trailhead building, and from the Ely Chamber of Commerce for up to $53,000 to staff that facility, have prompted the board to consider splitting the funds.
Zabokrtsky warned that diverting money to operational expenses sets a troubling precedent that could subject lodging tax funds to political pressures.
“We need to be wary of future requests for well-meaning and much-needed funding of projects, but projects that don’t necessarily serve the important purpose of the lodging tax,” he said. “That purpose is marketing our area to bring dollars to this community.”
As business owners who collect lodging tax from their clients, both speakers said they have a direct interest in seeing those dollars used effectively.
“In 20 years of business, some of the best branding and marketing materials I’ve seen anywhere have come from the tourism bureau,” Zabokrtsky said, adding that with the advent of AI and evolving marketing strategies, it’s critical that funding not be reduced.

Warning about budget consequences
Renner warned the council about the potential consequences of reduced tourism marketing, noting that decreased visitation would directly impact the city’s tax revenues.
“Taking away funds to bring people into Ely will eventually make larger budgetary goals than the $20,000 gap you’re trying to fill,” she said. “I pay sales tax based on the number of beds that I fill. I pay my state and real estate taxes all based on the worth of my business. If I can’t afford to pay those things, that budget gap will get much bigger.”
The Joint Powers Board’s decision to provide two-thirds funding to all requesting entities came after a meeting in which members debated the appropriate uses of lodging tax dollars and whether funding visitor center operations and building maintenance qualified as legitimate expenditures under state law.
Since Zabokrtsky and Renner addressed the council during the open forum portion of the meeting, council members did not respond.