Assembly OKs bed tax for ballot, but could reconsider vote Aug. 5

With a 5-4 vote, the Kenai Peninsula Borough Assembly passed an ordinance at its Tuesday meeting to ask voters on the Oct. 7 ballot if a borough-wide bed tax should be implemented.

But that could change.

After assembly president Hal Smalley announced the ordinance passed — assembly members Kelly Wolf, Mako Haggerty, Charlie Pierce and Wayne Ogle voted against the ordinance — Wolf gave notice of reconsideration of the vote.

At the Aug. 5 assembly meeting, if a member moves for reconsideration of the action, the body votes to reconsider and five members vote against the ordinance, the proposition will not appear on the ballot. 

However, if the assembly denies reconsideration or votes again on the ordinance and still passes it, voters will consider whether guests at hotels, motels, cabins, lodges and bed and breakfasts across the peninsula will pay a bed tax.

The assembly also amended the ordinance to reduce the tax from 4 to 3 percent.

At its July 1 meeting, the body changed the ordinance, which originally called for 75 percent of the proceeds to fund tourism promotion and 25 percent to be used for school purposes, so that the tax collected would be used primarily to promote tourism.

Also at the previous meeting, assembly member Dale Bagley proposed to reduce the tax to 3 percent. With an excused member, the vote tied and failed.

With a full body, Bagley proposed changing 4 percent to 3 percent again. The amendment passed 5-4.

The 3 percent tax would bring in an estimated total of $1.6 million with $775,243 collected in unincorporated areas to be used for tourism promotion, Bagley said. The remaining amount is what all the cities would collect.

Assembly member Bill Smith, who sponsored the ordinance, said while the amount of tax collected within the cities will go back to the cities for promotion and support, there is no requirement for what percentage of the proceeds will fund each of those.

“But I would submit that in those communities that there are city councils that direct where the money goes,” he said. “And they are going to be very sensitive to what the voices of the community are saying, especially the hotel industry about how to direct those funds.”    

While the ordinance is assembly member-sponsored, Pierce said it is “disingenuous” to say that the Kenai Peninsula Tourism Marketing Council didn’t assist with its creation. The borough provides $300,000 to KPTMC to market the peninsula and while KPTMC wouldn’t necessarily be the agency selected to continue promoting tourism, Pierce called the bed tax a “tax grab.” 

“That’s the problem with America today,” Pierce said. “It’s too easy. The solution and the answer to it is, ‘We’ll just get more taxes. We’ll raise more taxes.’ … Look at the business plan you’re currently in and look at how you can deliver the same level of services at a lower dollar and be more efficient at it.”

Ogle agreed with Pierce and said there are other options.

Assembly member Brent Johnson said KPTMC has worked hard to come up with a funding mechanism so it no longer has to annually request borough funding. 

Seward enacted a 4 percent bed tax in 1996. Assembly member Sue McClure, who represents Seward, said the tax has benefited the city and that many of the citizens she represents would like to see a borough-wide bed tax. 

 

“I’d like to see how the voters weigh in on this,” she said. … “And this may be the thing that brings the people out to vote.”

Kaylee Osowski is a reporter for the Peninsula Clarion.

 

 

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