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Kenai borough considers asking voters to approve bed tax

June 6, 2018

KENAI, Alaska (AP) — The Kenai Peninsula Borough is considering asking voters to approve a 12 percent sales tax on temporary lodging after officials have voted down variations of bed taxes twice in the past year.

The proposal by Assembly Member Dale Bagley would exempt lodging from the general 3 percent borough sales tax to avoid stacking taxes on the industry, the Peninsula Clarion reported Monday.

Under the proposal, temporary lodgings would include hotel rooms, recreational vehicles sites and short-term rental accommodations lasting less than 30 days

The proposal, which Bagley is seeking to bring before voters in the October election, would allow cities in the borough to adopt individual bed taxes and take up to half of the revenue from the 12 percent borough-wide rate.

The tax, which is common in much of the state and country, is expected to generate between $2 million and $3 million for the borough, Bagley said in a memo to the assembly. The new revenue would help fill the borough’s estimated $4 million budget gap.

“Several hundred thousand visitors travel to the Kenai Peninsula each year, and while they contribute to the area’s economy they also create a large demand on public services in the borough,” Bagley said in the memo.

Hotel and lodge owners have opposed past iterations of a bed tax, saying it would unfairly target a single industry. They instead have supported a sales tax increase or an increase in the cap on taxable sales.

By targeting the lodging industry, a bed tax would limit the revenue collected from what tourists spend on meals and goods, said Dick Erkeneff, owner of Kenai River Raven Lodge in Soldotna.

“If you’re going to tax visitors, why pick lodging?” Erkeneff said. “It’s an easy way to do it, but separating out the lodging and RV parks is just not a good thing. It hits just a limited segment of the population of visitors.”

The bed tax proposal is scheduled to go before the assembly later this month.

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Information from: (Kenai, Alaska) Peninsula Clarion, http://www.peninsulaclarion.com

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