The fate of a bed tax ballot question remains in limbo after Tuesday’s Kenai Peninsula Borough Assembly meeting.
The assembly spent over an hour hearing public comment and debating the topic. Up for consideration was a resolution that would have put a question on voter’s ballots this fall: should the borough collect a tax of up to 12% on short-term lodging and overnight camping accommodations?
The tax, if approved, would apply to stays of less than 30 days. It would also replace the borough’s existing three percent sales tax on those bookings. Accommodations within a city that collects its own bed tax would be partially exempted.
Everyone who testified about the bed tax resolution during Tuesday’s meeting spoke in opposition.
Jon Faulkner is the owner and operator of Land’s End Resort in Homer. He said people pay attention to price fluctuations.
“I think people care about money,” he said. “I think people care about saving money. My wife drives across town to save five cents for a gallon of gas. So I can't divorce myself from economics 101 Price, something goes up. demand goes down.”
Elizabeth Stark is the general manager of the Aspen Suites Hotel in Homer. The company has locations in Soldotna, Kenai and Homer. She worries charging people more to stay on the peninsula overnight will discourage groups like sports teams from wanting to play in the borough.
“I think if you came to any one of our hotels in Homer in the winter, what you would see is sports teams traveling,” she said. “If we don't provide a rate where these hockey teams, track teams can come to other schools, we're going to destroy the youth opportunities of these small towns.”
The question of a bed tax isn’t new to the borough. Assembly members voted down a similar tax in 2017 and 2018. In 2019, assembly members passed a tax, but it was vetoed by the borough mayor. Assembly members then lacked the votes to override that veto.
Assembly Vice President Tyson Cox introduced the resolution. He pitched the tax as one that could be used to offset the amount of money the borough spends accommodating large numbers of tourists. They say the influx of summer visitors to the borough strains the borough’s resources.
If approved by voters, the borough wouldn’t start collecting the tax until 2026. The borough’s finance department estimates the tax would bring in $854,289 during the first year and about $5.3 million each year after.
Assembly consideration of a bed tax comes after the Soldotna City Council passed one last December, despite opposition from hotel operators. The city’s four percent tax applies to all lodging booked within the city and takes effect in 2025.
On Tuesday, assembly members this week voted 6-3 to table the resolution. Later in the meeting, though, member Brent Hibbert said he plans to reconsider the item at the assembly’s July 9 meeting and set another public hearing for further into the future.
“I'd like to see this conversation and I would like to — as the mayor’s administration said, you know, get the groups together and see if we can figure it out — a way to raise some funds for our borough,” he said. “Because we do have some costs, and we have a small way to raise funds for this. And you know, I heard a lot tonight about what is fair. And I don't know that us taking care of solid waste and the roads and Central Emergency Services and that is fair for our constituents to foot the bill.”
If the assembly puts off reconsideration until October, it’s possible that the issue will be reconsidered by up to three new assembly members. That’s because this year’s borough election falls on Oct. 1 and there are three assembly seats up for election.
