Months after a ballot initiative to fund economic development in the borough failed, a local tourism promotion council is still looking for a secured and sustainable funding source.
The Kenai Peninsula Tourism Marketing Council would have stood to benefit from the implementation of Proposition No. 2, which would have raised sales tax 0.1 percent with the additional revenue supporting economic development likely for that organization and a host of others. But the proposition failed in the October election leaving KPTMC in the same position it was in this time last year — without a reliable annual funding source.
Currently, KPTMC is funded by the Kenai Peninsula Borough, which allocated the organization $300,000 in its current budget. However, that money didn’t come without extensive public testimony and assembly consideration, as is the case regularly when the borough considers its budget.
In response to the yearly uncertainty of whether the organization would get funded, KPTMC executive director Shanon Hamrick said the group’s board of directors pitched an industry-driven 1 percent sales tax on tourism services throughout the borough. The idea was sidelined over the summer when the assembly placed Proposition No. 2 on the ballot.
Hamrick said some people thought Proposition No. 2 was put forth by her organization, which it “absolutely wasn’t,” she said. KPTMC didn’t oppose the ballot measure strongly, yet it didn’t support it, Hamrick said.
“The reason being is that we would be slitting our own throats, basically by doing that,” she said. “We do believe that economic development on the Kenai Peninsula is important and that the borough should be making an investment in that, we just didn’t embrace the way they were trying to do it.”
Hamrick said the KPTMC board would discuss its funding situation at an early February retreat.
“Since we haven’t been able to get the administration or the assembly to be able to identify, ‘Yes, this money is coming from tourism,’ and, ‘Yes this the percentage that we are going to reinvest,’ now we are looking at a way to identify a very specific amount of money and say that is absolutely coming from tourism and we are going to reinvest this into growing the industry,” she said.
She said the 1 percent self-assessment of the tourism industry isn’t completely off the table. The group has been speaking with Kenai Peninsula Borough Mayor Mike Navarre about the tax, but no commitments have been made.
“It is still definitely something we would like to pursue,” Hamrick said.
Hamrick said her organization wants residents to understand it would like to derive its funding from visitors, not residents.
“We are still very interested in having the conversation about having a very direct tourism tax that will remove the resident from the equation,” she said. “These visitors are coming, they are used to paying taxes, they are used to paying high bed taxes everywhere they travel and we don’t have anything like that.”
In addition to the $300,000 KPTMC gets from the assembly, it raises $225,000 on its own to provide marketing.
The 1 percent tourism tax was estimated to raise $1.6 million when the idea was first presented in May of 2011.
Of that total raised, 3 percent would have been kept for KPTMC administrative costs and $465,481.34 would be set aside for area marketing campaigns conducted by the organization, Hamrick said.
Money collected in the incorporated areas of the borough — cities like Seward, Soldotna and Kenai — would have been returned in full to those local governments for marketing of that specific area, she said.
Hamrick said 90 percent of money collected in the unincorporated areas of the borough would have stayed with the KPTMC — making up the proposed $465,481.34 — and the remaining 10 percent would have been placed into a tourism grant program for unincorporated communities.
Assembly member Bill Smith, who was a sponsor of Proposition No. 2, said he proposed the measure after hearing about KPTMC’s proposal.
“I wasn’t fond of that, but I did tell them I would try and help and so that is where the tenth of a percent came from,” he said. “But they wanted … something totally dedicated to their industry and I don’t see that happening. I didn’t think their proposal was practical.”