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But because of a previous agreement, the city would not receive any additional funding from the only existing hotel, owned by the Riverside Casino & Golf Resort.

The tax would apply to any future hotel or motel in city limits, which mayor Bill Poch said is a likely expectation.

"I feel there is a very substantial possibility that we will have another hotel in the future," he said.

"I think it's a great thing. It should be voted yes," Poch said. "Why wouldn't we say yes?"

Under Iowa law, at least half of the money received from a hotel/motel tax goes to a city for the promotion and encouragement of tourism, cultural, educational, charitable, economic development and city beautification.

The city and casino created an agreement in April 2005 where, in lieu of other charges, the casino gives the city $1.7 million annually, in equal monthly installments. The casino presented the city with the first check Oct. 2 for more than $146,000.

If voters approve the measure, the casino will charge its hotel guests the hotel/motel tax in addition to the 5 percent state sales tax.

Under state law, money from the hotel/motel tax goes first to the state, which distributes it to each city and county that collects the tax. But because of the agreement between the city and the casino, the city would reimburse the 7 percent hotel/motel tax to the casino, City Clerk Tina Thomas said.

City Councilor Randy Sexton said he favors the tax.

"It's a great area for funding, I think," Sexton said, because the tax revenue would come not only from Washington County residents but from others, too.

Revenue from the tax could help spur development in downtown, bringing in more businesses that could attract a variety of tourists, Poch said.

As of July 1, 12 counties and 107 towns and cities in Iowa have hotel/motel taxes in place, ranging from 1 percent to 7 percent.