Assembly considers bed taxes

By Naomi Klouda
Homer Tribune

Editor’s note: The borough assembly Tuesday night voted 5-4 to approve two issues slated for the ballot: on Oct. 7, voters decide whether there will be a 4 percent bed tax levied throughout the Kenai Peninsula. Voters also get a say in whether there will be a fundamental switch in the way voters submit their ballots – through U.S. mail.

Watch for two key decisions that could depend on voters after the Tuesday night Kenai Peninsula Borough Assembly meeting; one would fundamentally change how voters register ballots, while the other levies a boroughwide bed tax.
According to Assemblyman Dale Bagley, the idea to have voters cast ballots by U.S. mail didn’t receive much public attention. Bagley set the matter before the assembly for a second vote at Tuesday’s meeting.
“Only about 10 people testified on it, mostly against. I would like to see a public advisory vote before we make such a fundamental change in the way people vote,” Bagley said. “The first motion failed for this year, but there is a still a chance the assembly will put it to a vote (on the Oct. 7 ballot.)”
At a July 1 meeting, a resolution asked to place the question on the ballot: Should borough elections be conducted by mail? Reasoning included reaching remote areas more efficiently and conveniently, as well as reducing staff expenses and money spent training election officials. In places where mail voting is underway, voter turnout has increased, Bagley said.
Traditionally, the borough sees dismal turnouts at the polls, about 17-19 percent.
But the vote failed 3-5, and Bagley said he felt if the matter were up for reconsideration, it might pass this time. So, he asked for the Tuesday night re-vote. Those voting “no” included Assembly members Bill Smith, Sue McClure, Mako Haggerty, Hal Smalley and Wayne Ogle.
The State of Alaska paved the way for municipalities and boroughs to adopt voting-by-mail procedures in its Senate Bill 214 this spring.
“The state opened the question,” Bagley said. “I think they want someone else to be the guinea pig. If the Kenai Peninsula does it first, they can see how it goes.”
The fact that the plan wasn’t well vetted before the public is one problem. If the Assembly had passed the measure at the July 1 meeting, a lot of voter confusion could result on election day, Oct. 7, Bagley said. At that point, they would have been handed the change without voting on it.
“I think this is too big of a change for nine members of the assembly to make. I don’t want to imagine the headaches it would create if we went this fall to voting by mail,” Bagley said. “A lot of people might throw away ballots without realizing it.”
He proposed changing the ordinance to allow voters’ input first.

Bed Tax
The momentum to install a bed tax in the Kenai Peninsula Borough has met with a greater mix of public input and is a more thoroughly vetted ballot question.
A recently formed group, the Homer Voice for Business contends the bed tax would hurt Alaskans, since in-state visitors make up a large portion of the Homer tourist market. Others noted that the tax would be too steep for many visitors, who might choose to take their business elsewhere or spend less in other areas, such as eating out.
Elsewhere on the Peninsula, the support for a bed tax has gained momentum.
Survey results were collected at the Soldotna Chamber’s Breakfast and Benefits event in May. It was attended by more than 200 Soldotna chamber member businesses. Tabulated results, released in the most current Homer Chamber of Commerce newsletter, showed 53 businesses want the tax, and another 57 say they favor it if the money goes to support tourism infrastructure. Another 28 said they weren’t sure the tax was a good idea, and 17 said they didn’t want it.
The City of Seward has had a bed tax for 18 years. The four percent tax goes to the Chamber of Commerce to specifically market Seward as a destination point for tourists and new companies. Residents of the city voted for the tax in 1996 and so far, the system is getting a thumbs up from city officials and employers that rely heavily on that marketing, the Seward Phoenix Log reported.
Whether to place the issue on the ballot has been debated by the Kenai Borough Assembly on three separate occasions — with public input. Twice, the assembly voted it down without placing it on the ballot. Alternative versions have been proposed and those have also been knocked down.
Assemblywoman Sue McClure of Seward said there are several reasons the bed tax has hit roadblocks at the borough level. One is that Seward already sees a heavy tourism sector.
“Some larger groups like CIRI think it’s unnecessary, because they already spent a lot of money marketing,” she said. “Others think there are too many tourists as it is. Others don’t like the proposals that include giving a portion of the bed tax to schools or other programs. The opposition is a mixed bag.”
The City of Seward has already gone on record to say it supports the bed tax at the borough level, because any additional marketing for the region helps Seward — without costing the city any more than its current four percent tax. Seward would opt out of a borough tax, since it already has one in place.
At Tuesday’s meeting, the assembly first had to consider whether to pose the question to voters.
The ordinance, sponsored by assembly member Bill Smith of Homer, proposes that 75 percent of the tax collected in unincorporated areas of the borough go to tourism promotion for the borough. The remaining 25 percent would be used for borough schools. Tax collected in cities would go to their own coffers.
“I’m trying to keep pressure off the general mill rate,” Smith told the Homer Tribune in an earlier public discussion. “Hopefully, if this bed tax passes it will help do that.”
Shanon Hamrick, executive director for KPTMC, said a 4 percent bed tax is estimated to bring in about $2.4 million, based on 2013 taxable accommodation sales numbers.
Of that $2.4 million, about $1.4 would go back to cities, $796,609 would go to borough marketing and $265,536 would go to schools.
“In order for the borough to maintain our schools — for as good as we can — we’re going to be looking at spending more money on them than we have been,” Smith said.
While other percentages and allocation amounts were considered, Hamrick said KPTMC proposed a 4 percent bed tax, the same as what the city of Seward currently has in place.
Homer and Seldovia both have sales tax rates of 7.5 percent. A 4 percent bed tax would create a total tax of 11.5 percent, still under Anchorage, Juneau and Sitka’s 12 percent bed tax rates.
“In many respects, we have a competitive environment to get tourists to come and so (I) just wanted to be within a good, reasonable tax that we see in other communities,” Smith said.
As laid out in current code, an accommodation tax would be on a per-night basis. However, hotel or motel room rentals for 30 or more consecutive days would not be taxed. The tax would not be imposed until after April 1, 2015 to allow for businesses to make the bookkeeping transition.

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Posted by on Jul 22nd, 2014 and filed under Headline News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

1 Response for “Assembly considers bed taxes”

  1. Patricia Cue says:

    I oppose the bed tax. I also oppose increasing the mil rate. The current infrastructure of the KPB cannot support the current level of tourists. Roads are clogged. Trash scattered on roads. Crime rates high. Small business owners like myself cannot compete and you will force me out.

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