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Assembly sends bed tax ordinance to voters, but could reconsider

Posted: July 23, 2014 - 7:22pm  |  Updated: July 23, 2014 - 7:31pm

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, with assembly members Kelly Wolf, Mako Haggerty, Charlie Pierce and Wayne Ogle voting 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 or not guests at hotels, motels, cabins, lodges and bed and breakfasts across the peninsula will pay a bed tax.

Felicia Keith-Jones, owner of High Mark Distillery in Sterling, spoke in favor of the bed tax.

She said local business like her distillery, hotels and restaurants all depend on one another to make a living and the bed tax will help to grow tourism businesses.

“In my mind when I think about it, I absolutely comprehend it as a community growth tax,” she said.

Dan Michaels, general manager of Kenai Princess Lodge in Cooper Landing, asked whether all tourism businesses should have a tax to support the promotion of the Kenai Peninsula.

“I’m definitely in favor of a broad-based tourism tax rather than a targeted bed tax,” he said.

The assembly also debated the issue and amended to the ordinance to reduce the tax from 4 percent 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 the tax from 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 of the borough to be used for tourism promotion, Bagley said. The tax revenue collected within cities would go to those cities.

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.

The City of 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 can be reached at kaylee.osowski@peninsulaclarion.com.

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