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Resident opposed to bed tax

Posted: July 21, 2014 - 7:46am

Bill Smith, KPB Assembly Member from Homer has introduced Ordinance 2014-25, the “Area wide Transient Accommodations Tax,” also called the “bed tax.” He asks KPB to establish a 4 percent “bed tax” that KPB businesses will charge visitors. It is proposed to collect this tax as a “pass thru” from the KPB to the Kenai Peninsula Marketing Council (KPTMC).

Now let’s peel the onion.

‘The KPTMC currently receives $300,000 per year from the Borough for marketing. This is an NGO (non-governmental organization), receiving taxpayer monies without any financial audit provided. Audits provided by KPTMC to the KPB: none. The explanation for use of funds: Tourism?

Estimates of revenue to be raised by the tax are between $2.0 and $2.4 million. Use of funds? Tourism. This is so absurd it is almost laughable. An additional $2 million-plus to do what?

What is a “pass thru”? It means the KPB collects the tax and immediately transfers the monies to the KPTMC. No checks, no balances — just pass it on. Incredible. Seniors will remember this as “payola in the 60s”; “graft in the 70s”; “corruption in the 80s” and now it is a modern day politically correct term “pass thru.”

The new bed tax is an unaccountable tax to be funneled to an outside organization, with no responsibility for disclosure, except it’s for tourism.

Who markets cruise trips to Seward? Homer? Princess Lodges? The cruise lines.

Who are a majority of people staying at local owned facilities? Alaskans.

Who pays this tax? Alaskans.

Approximately 60 percent of guests staying at local owned KPB facilities are Alaskans.

Let’s try some common sense.

In February of this year, Mayor Navarre announced that the voter approved increase in residential real estate property exemption, along with senior retention of that exemption was forcing the KPB to take $1.3 million out of reserves. He would have to find a way to make up the difference. Restructuring budgets to accommodate the public demands for tax relief would have been the fair and prudent method.

If we really “need” a bed tax let’s direct it to the Borough reserves and stop the negative rhetoric about KPB residents for voting for tax relief; let’s enhance technology access for teachers and students or do both.

If the Mayor and Assembly insist on the bed tax, Mayor Navarre and all Assembly members should be required to execute an agreement to not accept a position or money from KPTMC, now or after leaving office. KPTMC funds should be forfeited for violating that agreement. The forfeiture must be immediate and non renewable.

In addition, before KPTMC receives any funds from KPB, it should be required to provide an audited financial statement from a recognized accounting firm.

Ordinance 2014-25 should be defeated 9-0. The stench for the potential of financial malfeasance and corruption is way too obnoxious. There are many politicians spending time in federal facilities for less financial malfeasance than this.

Dear Mr. Mayor and Assembly members, vote no, on Ordinance 2014-25.

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Suss
4043
Points
Suss 07/21/14 - 10:29 am
1
1
Nose Knows Crime Drama

"The stench for the potential of financial malfeasance and corruption is way too obnoxious."

Quite the nose for corruption.

Not too sure how to develop such a futuristic olfactory sense.

Pretty outrageous projections.

We still get a vote up or down if the assembly passes this ordinance.

My guess is any and all thought about taxes, stinks to [filtered word]s.

Does bankruptcy smell?

shanonhamrick
8
Points
shanonhamrick 07/21/14 - 01:09 pm
2
0
Let's take another look...

Peter, Thank you for giving us an opportunity to clear up some misconceptions about the way in which the Kenai Peninsula Borough conducts its tourism marketing programs and the proposed bed tax.

Let’s take another look at the layers of that onion, shall we?

Peter: "The KPTMC currently receives $300,000 per year from the Borough for marketing. This is an NGO (non-governmental organization), receiving taxpayer monies without any financial audit provided. Audits provided by KPTMC to the KPB: none. The explanation for use of funds: Tourism?”

Reality: KPTMC has been in existence since 1991. We provided audited financials through 2010. After that the KPB Grant threshold for audits was raised to $500,000, which is the standard for federal grants. We provide quarterly reports on all money spent, and we are reimbursed for expenses, not forward funded.

Peter: “Estimates of revenue to be raised by the tax are between $2.0 and $2.4 million. Use of funds? Tourism. This is so absurd it is almost laughable. An additional $2 million-plus to do what?”

Reality: We don’t know how the final ordinance will look, but as it stands now all monies collected in the cities would be returned to the cities, to be used for their own marketing and infrastructure needs. This would leave just over a million to be used for MARKETING THE BOROUGH. It is likely that percentage will be adjusted at tomorrow night’s assembly meeting.

Peter: “What is a “pass thru”? It means the KPB collects the tax and immediately transfers the monies to the KPTMC. No checks, no balances — just pass it on. Incredible. Seniors will remember this as “payola in the 60s”; “graft in the 70s”; “corruption in the 80s” and now it is a modern day politically correct term “pass thru.”

Reality: This statement is completely inaccurate. First, there are no guarantees that KPTMC would be the agency that would continue to conduct the Borough’s marketing program. It is very likely that if the bed tax were to pass the KPB would have a competitive bid process to choose the organization or agency that would conduct the program. Second, it is blatantly false that there are no checks and balances on money the borough invests in programs. The Assembly would continue to have control over allocating the funds each year, and the organization operating the program would continue to have to account for its spending and results.

Peter: “Who markets cruise trips to Seward? Homer? Princess Lodges? The cruise lines.”

Reality: Cruise companies market their products almost exclusively. While cruise passengers are an important part of the big picture of tourism in Alaska, The Kenai benefits most from independent travelers.

Peter: “Who are a majority of people staying at local owned facilities? Alaskans. Who pays this tax? Alaskans. Approximately 60 percent of guests staying at local owned KPB facilities are Alaskans.”

Reality: We are Alaska’s Playground, no doubt about it. When Kenai Peninsula residents travel to Anchorage, MatSu, Fairbanks, Juneau, Ketchikan, Sitka, Kodiak… we are paying bed tax to support their marketing and infrastructure needs. We think they should be returning the favor.

Peter: “In February of this year, Mayor Navarre announced that the voter approved increase in residential real estate property exemption, along with senior retention of that exemption was forcing the KPB to take $1.3 million out of reserves. He would have to find a way to make up the difference. Restructuring budgets to accommodate the public demands for tax relief would have been the fair and prudent method. If we really “need” a bed tax let’s direct it to the Borough reserves and stop the negative rhetoric about KPB residents for voting for tax relief; let’s enhance technology access for teachers and students or do both.”

Reality: A bed tax will provide needed marketing dollars to bring more visitors, and their money, to The Kenai. Sales tax dollars brought in by visitors offset the amount of money residents pay in property taxes. This is good business for the residents of the Kenai Peninsula.

Peter: “If the Mayor and Assembly insist on the bed tax, Mayor Navarre and all Assembly members should be required to execute an agreement to not accept a position or money from KPTMC, now or after leaving office. KPTMC funds should be forfeited for violating that agreement. The forfeiture must be immediate and non renewable.”
KPTMC does not have a PAC and has never put money forward to support any political candidate. In addition, before KPTMC receives any funds from KPB, it should be required to provide an audited financial statement from a recognized accounting firm.”

Reality: If a bed tax is put forward to the voters and passed, and if KPTMC were the organization that was chosen to continue marketing the Borough, an audit would be required as the amount would be over the $500,000 threshold required by KPB code.

Peter: “Ordinance 2014-25 should be defeated 9-0. The stench for the potential of financial malfeasance and corruption is way too obnoxious. There are many politicians spending time in federal facilities for less financial malfeasance than this.”

Reality: This debate has been 100% transparent. The question Ordinance 2014-25 asks is whether or not a bed tax should be put before Kenai Peninsula voters.

Raoulduke
3055
Points
Raoulduke 07/22/14 - 03:49 am
0
0
Tax,or Salaries Increase?

The KPB is practicing the Juneau move-NO ACCOUNTABILITY of monies. The KPBMC gives tourism as the explanation for receiving $ 300,000 of tax payer monies.Rather weak in the explanation department.Are salaries paid from this $300,000 to the personnel working at KPBMC? If so Do they receive borough retirement benefits?They should. Since it is Borough money.Why is a non-governmental agency receiving these monies anyway? Sound like the people of the borough are paying very well for an entity.That is rather unnecessary.The outside already knows about the great Kenai.

Suss
4043
Points
Suss 07/22/14 - 11:06 pm
2
0
Thank You, Shannon Hamrick

Your response does help clarify and it made perfect sense.

One proposed idea I had heard was that each City or Borough entity recieved half \ 50% of the bed tax, collected in their area, the, other half going to the tourist promotion.

Another component was that some funds were to go to schools.

All is up for discussion and the final ordinance may look completely different.

Then If the ordinance passes, and only if it passes does the public get a final vote by the public to vote up or down and start the transient bed tax revenue stream.

So KPTMC, the Borough and it's Cities would all recieve the revenues that would be taxed from visitors and not from property tax payers.

Let the votes happen.

leewaytooo
2085
Points
leewaytooo 07/23/14 - 03:11 am
2
1
an easier method would be to

an easier method would be to have a head tax collected

at a toll booth at the borough line, also at the docks,

and the airports...no ak ID card?? pay up....

bring on the vote......

more money, more money....

yeah!!!!!!!

Suss
4043
Points
Suss 07/23/14 - 07:57 am
1
1
5 to 4, on to the Voters

Nothing is ever over, the voters will decide the bed tax.

This does not affect me one way or the other. Tax the tourists.

Raoulduke
3055
Points
Raoulduke 07/24/14 - 05:46 pm
1
0
Salaries

Are salaries to be paid,or salaries increased from this $300,000? If so Why?

Allen
641
Points
Allen 07/24/14 - 07:41 pm
4
0
Another Bad Idea

The bed tax is a bad idea. It's unfair, and the ordinance is a mess. The bed tax is unfair because it raises taxes on lodging to pay for tourism marketing, but the other tourism businesses don't have to pay the tax.

It is illegal to dedicate tax revenue in Alaska, so the assembly can't legally dedicate the tax to tourism marketing. That means the Borough could use bed tax revenue for other Borough operations, at any time. And the Borough can't require the cities to use the tax the way the Borough wants it to.

It's easy for business owners such as Felicia Keith-Jones (High Mark Distillery in Sterling) to be in favor of the tax because her business won't be affected by it.

The bed tax will drive visitors out of lodging in the cities with their higher (9%+) bed tax.

Why doesn't the KPTMC tax their member tourism businesses to pay for marketing? Why do we need higher taxes to subsidize one type of private industry? The other local businesses don't get subsidies like this, they have to make it on their own. If we are going to have a tax to support marketing for local businesses, I would rather it go for year round businesses, not seasonal tourism businesses with employees from out of state.

NellieJ
8
Points
NellieJ 07/25/14 - 12:04 pm
4
0
What about the unincorporated areas?

If all funds collected in cities will go back to cities for their own infrastructure and etc. needs, what happens to the funds collected in the tax code "99 other areas" of the borough? It doesn't seem very fair to prevent these areas from receiving the local benefit of the use of these tax dollars for their own particular needs. Until each area of the borough can be assigned a unique sales tax code which would allow for a comprehensive method to discern what monies come from which area, this type of ordinance should not even be considered. At this point, there is no way to tell how much of the borough sales tax comes from Cooper Landing, Hope, Moose Pass, Sterling, Anchor Point, and other areas. I’m sure Cooper Landing alone brings in a tidy sum with the Princess Lodge there. The marketing efforts I've seen put forth by KPTMC up to this point have been extremely unimpressive. For our business in particular, we did not receive a single sale or lead from our KPTMC membership for the seven years we were members and decided to drop our membership because we didn't receive a single dollar of return on that advertising expense. Most travelers these days ignore the glossy brochures and look for trusted traveler reviews at sites like TripAdvisor and Yelp. Just one other question I am curious about: what is the annual payroll expense for KPTMC?

cheapersmokes
1145
Points
cheapersmokes 07/29/14 - 07:41 am
0
0
Bed Tax

Sorry, But I can only see more government intrusion into private businesses with this proposal. I think for $300,000 a year you should all be overflowing with visitors ready to pop open their wallets and dump a bunch of cash into all Borough businesses. The best advertising has always been word of mouth and if you provide an enjoyable time for the visitors they will return and tell all of their friends about the special trip they enjoyed. I challenge you all to make them feel welcome this summer.

Raoulduke
3055
Points
Raoulduke 07/31/14 - 05:03 pm
2
0
A True Necessity?

The question that should be asked is."Is the KPTMC truly necessary"? What have you done for the Kenai lately? Not what have you done in the past? If the borough can save $300,000. I'm all for it.

Raoulduke
3055
Points
Raoulduke 08/01/14 - 04:14 pm
2
0
Reality

S. Hamrick- I comment with question. Are salaries,or salary increases to be paid from this $300,000,and is the KPTMC a true necessity of the Kenai?

beaverlooper
3152
Points
beaverlooper 08/04/14 - 08:44 am
0
0
Blue

As red as this state is it seems we can't wait to tax anything and everything. I guess we are a purple state now. w
Roladuke the answer is it isn't.

shyeene
180
Points
shyeene 08/03/14 - 09:13 am
0
0
Bed tax

When is the Borough Mayor and current board going to listen to the citizens of the Kenai Peninsula. It has been obvious based on public comment both at the borough council meetings and outside of the meetings that the citizens do not support a bed tax. If you truly listened then this would not even be headed to the ballot for a vote.

shanonhamrick
8
Points
shanonhamrick 08/04/14 - 09:28 am
0
0
Salaries

Raoulduke,

KPTMC's $300,000 grant agreement (contract) with the KPB for FY15 allocates $42,200 to personnel. The only personnel costs that are charged to the grant are costs associated with direct marketing activities, such as staffing trade show booths. KPTMC has 3 full time employees and one part time bookkeeper.

KPTMC is a 501 c 6 organization, we are not Borough employees and we don't receive Borough benefits. We generate approximately $250,000 in earned revenue through membership and cooperative marketing sales. This earned revenue covers all of our overhead.

As to the question of whether or not KPTMC is necessary or what we have done for the Borough lately, why don't you come by our office? I would be more than happy to go over our programs with you. Before you come by feel free to do a little research of your own... Google something as simple as: "are destination marketing organizations important?" This will help give you some perspective.

There are a lot of jobs in this state that people are doing that I don't see the value in, because I haven't taken the time to educate myself about them.

We are located at 35571 Kenai Spur Hwy., Soldotna (in the JoAnn Fabrics mall across from Bailey's Furniture.) Hope to see you there. If you can't make it in person give me a call at 262-5229. Thanks, Shanon

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