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Proposed bed tax draws comments for and against issue

Assembly drops schools as a revenue recipient

Posted: July 2, 2014 - 9:24pm

Lodge, hotel, motel and bed and breakfast owners, representatives of interested organizations as well as general members of the public from throughout the Kenai Peninsula Borough presented polarized views on a proposed borough-wide bed tax.

The Kenai Peninsula Borough Assembly, at its Tuesday meeting, held a public hearing on a proposed ordinance that, if passed, would ask voters on Oct. 7 if a 4 percent bed tax should be implemented.

The Kenai Peninsula Tourism Marketing Council is currently funded at $300,000 annually to promote tourism in the borough. If the tax passes and the borough continues to use the agency to market the borough, KPTMC would no longer request the yearly funding. According to the ordinance, bed tax in the cities would go back to the cities.

Molly Poland, owner of Hooligans Lodging and Saloon in Soldotna, is against the proposed tax.

“I think this is the wrong direction to go; to start taxing people as they come in is going to have a negative (effect),” she said.

Jon Faulkner, owner of Land’s End Resort in Homer, Kenai Landing in Kenai and the Van Gilder Hotel in Seward, also opposes the tax. Faulkner brought a petition signed by 21 businesses against the tax to the meeting.

“This is a very divisive and polarizing issue,” Faulkner said. “… This initiative is not about the enhancing of marketing. It’s about taking more tax dollars from the visitors that we have.”

Alice Kerkvliet, owner of Mykel’s Restaurant and Soldotna Inn in Soldotna, said bed taxes are common throughout the state and the world and thinks a borough-wide bed tax would be a positive move.

“I’m a fan of the marketing that KPTMC has done,” Kerkvliet said. “… I think a 4 percent borough-wide bed tax would make it even better. The synergy that would come from all of the properties participating in it would just make it that much better.”

Kenai-based Diamond M Ranch Resort manager, Jason Young, believes a bed tax will increase tourism on the Kenai Peninsula, citing the City of Seward and what it has done with its 4 percent bed tax as proof.

“(Diamond M Ranch is) willing to roll the dice and believe that that money is going to come back and do what it is supposed to do,” Young said. “That is because, largely in part, we have a great example with Seward. Seward has done well. They’ve taken the money, they’ve reinvested it and it is proven that it has increased their tourism.”

The assembly passed one change to the ordinance and failed two amendments to the bed tax percentage.

The ordinance sponsored by assembly member Bill Smith originally called for 75 percent of collected tax outside of cities to be used for tourism marketing and 25 percent to be put toward borough school purposes. Smith, along with assembly member Dale Bagley sponsored an amendment to use the bed tax collected outside of cities for only tourism promotion. The amendment unanimously passed.

Assembly member Kelly Wolf proposed changing the 4 percent bed tax to 1 percent. Only one other assembly member, Wayne Ogle, voted in favor of the change with Wolf.

The assembly considered amending the ordinance to a 3 percent bed tax proposed by Bagley.

“I’m in favor of it because we had 4 percent with 25 percent going to the school district,” assembly member Brent Johnson said. “So if you take away 25 percent to the school district, which we just did by the last thing, now we’re basically close to the same number we were before and that makes sense. That’s the amount that KPTMC was looking for.”

With assembly member Charlie Pierce excused from the meeting, the proposed amendment evenly divided the body. Assembly members Bagley, Smith, Johnson and Sue McClure voted in favor of the 3 percent bed tax. When the assembly ties on a vote, the vote fails.

A final public hearing on the proposed bed tax ordinance is scheduled for the assembly meeting at 6 p.m. on July 22 at the George A. Navarre Administration Building in Soldotna.

Kaylee Osowski can be reached at kaylee.osowski@peninsulaclarion.com.

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