KPTMC funding is money well spent

Posted: Sunday, May 22, 2011

The debate over funding for non-departmental agencies in this year's Kenai Peninsula Borough (KPB) budget has heated up -- especially concerning the investment the Borough makes with the Kenai Peninsula Tourism Marketing Council (KPTMC). This debate has been largely encouraged by a recent series of editorial columns in the Peninsula Clarion, calling for an end to government investment in tourism marketing.

It is the roll of a second class Borough to support economic development. Promoting our tourism industry is economic development. KPTMC has never made a claim, as the Peninsula Clarion has suggested, that tourism will live or die on the back of our organization. What we do say, with independent research to back up our assertion, is that we have a direct impact on bringing in at least 10 percent of the total number of visitors to the Kenai Peninsula each year.

In 2009 there was a $4.50 return in actual sales tax dollars for every dollar the Borough invested with KPTMC. In the private sector, that meant $47,073,600 in additional spending, spending that would not have taken place without this investment. These figures represent real money. New money that is brought in every year and re-circulated throughout our economy many, many times.

Would tourism on the Kenai Peninsula cease to exist if we did? Absolutely not; but it would decline, and Borough taxpayers would pay the price.

The Clarion's most recent opinion piece claims that we are making a "back door" attempt to raise funds through a self assessment. KPTMC has been traveling the Borough, speaking with elected officials, industry leaders, chambers of commerce, and the public at large to ascertain whether or not a 1percent tax on visitor services would be supported. There is nothing sneaky or underhanded about our proposal. Whether or not the Borough invests a portion of this year's budget in tourism marketing, and whether the public would agree with a 1 percent tax on tourism services, are two separate issues.

It is also important to remember that the Borough not only needs to cut spending, it needs to raise revenue. Since Kenai Peninsula visitors reap the benefit of KPTMC and Borough services, we feel that it is 100 percent reasonable that they would pay a direct tax to support these services that they enjoy while planning and taking their dream-trip to The Kenai. Our ballot proposal for a 1 percent tax on tourism services is not an attempt to tax any business. It is a user fee on the visitor. A very small, equitable, tourism tax that doesn't overly burden one segment of the industry -- as a bed tax is frequently thought to do.

This targeted visitor tax would have brought in approximately $1.6 Million if it had been in place during 2010. Not only would this have completely eliminated the need for any additional KPTMC funding, it would also have provided well over $1,000,000 in funding for the incorporated cities within the KPB.

The Clarion also suggested that if we feel that government must be involved in tourism, the Borough should "form a service area and elect an oversight board made up of members of the public." This is an inconsistent statement considering their hard line on no new taxes. A service area would be a tax on residents, not visitors. In addition, KPTMC is already lead by an oversight board with its make-up mandated by our by-laws: two representatives from each region of The Kenai, Eastern, Central and Southern. Our four incorporated communities have designated seats on our Board from their city marketing organization. We then have two at-large positions. This make-up guarantees that the Kenai Peninsula as a whole is represented. Anyone who has been a member of KPTMC for six months can run for our Board of Directors. In addition, we have considerable oversight from the Borough administration, and the Kenai Peninsula Borough Assembly.

It is important to note that 89 percent of destination marketing organizations throughout the world are funded through a targeted visitor tax. In addition, 29 percent receive non-visitor taxes. There is a reason that destinations throughout Alaska, the nation, and the world conduct this type of marketing -- because the return far outweighs the investment.

The tourism industry provides services that create a "pipeline" of money into this Borough. We are working for the tax payers to give the maximum return on investment. We work year-round to support the tourism industry which in return creates business opportunities, jobs, keeps our taxes lower and positively impacts the quality of life for Kenai Peninsula Residents.

If the residents of this Borough would like to see their sales and property taxes remain low, inviting visitors to The Kenai to spend their money just makes sense.

Shanon Hamrick is the executive director of the Kenai Peninsula Tourism Marketing Council.

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