Tax stance unchanged

Ordinance goes to voters

Posted: Sunday, June 12, 2005

A controversial ordinance adopted by a narrow 5-4 vote last month sending the question of a boroughwide bed tax to the October municipal ballot was brought back to the table Thursday for further consideration by the Kenai Peninsula Borough Assembly.

When all was said and done, however, the Ordinance 2005-05 was adopted again, this time by an even wider margin, clearing the way for the fall referendum.

Opponents of the bed tax, which if approved by voters would authorize the assembly to impose a tax of up to 4 percent on accommodations provided by hotels, motels and bed-and-breakfast operations, had hoped to see the bed tax overturned in favor of an as-yet unformulated tourist industry tax proposed by a group of Homer-area business owners. They argued such a tax could be broader-based, require less in taxes from local residents, ultimately generate more tax income and spread costs more evenly.

Assembly member Paul Fischer of Kasilof called for reconsideration when the ballot ordinance passed May 17. The June 7 meeting ran long and the issue was not brought up until the assembly reconvened two days later.

The reconsideration vote passed 5-4. But after some discussion and adoption of amendments meant to clarify some of its language, the assembly voted to support the bed tax again, this time by a 6-3 margin.

Just prior to the reconsideration vote, assembly member Ron Long of Seward cautioned that abandoning the bed tax ballot measure in favor of a different tax provision still to be written that would be unlikely to meet deadlines for inclusion on the fall ballot would effectively delay a public vote on the revenue-enhancement provision for more than a year.

"Had this conversation started about Feb. 15, it might have had a chance, but at this point it may be well intentioned but futile," he said.

Assembly member Dan Chay of Kenai said he supported reconsideration in order to have a conversation about the proposed alternative brought to him by Homer hotelier Mike Warburton and others. Chay acknowledged that that proposal would be an initiative for next year.

Warburton's proposed tour-ism tax would hit tourists at more businesses and for more services than just lodging accommodations. It could include guiding services, charters and sightseeing.

Assembly member Chris Moss of Homer said Warburton's proposal had a lot of merit, but like Long, he said the time frame for the tourism tax to become a viable substitute for the ballot-bound bed tax made that impossible because of ballot deadlines. If the bed tax as it now stands was not appropriate, "it needs to be voted down," he said, adding that the Warburton proposal could still go through the same ballot process next year.

Long said he did not see overwhelming support for an alternative tax, only signatures showing opposition to the bed tax.

Fischer, Grace Merkes of Sterling and Gary Superman of Nikiski opposed the amended version of the bed tax.

Milli Martin of Diamond Ridge, who originally opposed the bed tax, changed her mind and voted for the measure Thursday. She said the original wording appeared to allow all bed tax revenues (the bed tax is called a "transient tax" in the ordinance) to be transferred to a room tax fund, an account that could be the source of funding for tourism marketing efforts.

The reworded amendments that allowed her to vote yes limited that transfer to 25 percent. The rest would be available to support general government operations.

Martin went on to say she remains very interested in the Warburton proposal. But in lengthy discussions with the borough finance department officials, she said she learned there were serious concerns about oversight and just what kinds of businesses could be covered by a broader tourism tax. She said she is interested in pursuing a broader tourism tax next year. As for the bed tax headed for the ballot, Martin said she believes that by and large the average taxpayer supports a bed tax.

Warburton said Friday he left the Thursday meeting somewhat depressed. He said he hoped to see the bed tax put on hold. He said, however, that he "learned a lot" and was lifted by the support shown by others for the alternative tax idea.

He said he is not giving up on the broader tourism tax mechanism and intends to pursue a possible ballot measure for the 2006 election.

"I'm not abandoning it, not at all. It's too good of an idea," he said.

In other business, the assembly:

n Adopted Ordinance 2004-19-52, accepting and appropriating a grant from the Alaska Division of Homeland Security and Emergency Management of $26,637 for the Kenai Peninsula Citizens Corps programs.

n Adopted Ordinance 2004-19-53, accepting and appropriating a grant from the Alaska Division of Homeland Security and Emergency Management of $238,568 for emergency preparedness efforts.

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