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Econ 919: Kenai Council hears bed tax opposition


    The Kenai City Council passed a resolution this week — after much debate and many amendments — essentially supporting Assemblyman Dale Bagley’s latest attempt to have a bed tax approved, first by the assembly, and then the voters.

Former Kenai City Councilman Duane Bannock, now associated with the Uptown Motel, came before the council to express his extreme displeasure over Bagley’s proposal and the city’s potential support. 

He claimed, in a lengthy exchange with current City Councilman Tim Navarre that it was unfair to motels as it does not treat RV parks in the same manner:

“Why? Well, let's examine the value, the tax value of the Uptown Motel and its customers. Number one, hotels pay a disproportionate share of property tax when considering square footage; two, as mentioned our customers aren't subject to the tax cap for the real estate; three, our customers have a higher probability of spending money in restaurants and bars, where they pay more sales tax; four, our customers have a high probability of renting a car where they pay state sales tax, in addition to local and borough sales tax,” Bannock said.

“What we reject in its entirety is the notion that we don't have a bed tax because we do have a bed tax. It's just not called a bed tax. We have a bed tax because my customers pay a higher rate of tax, we remit a higher rate of tax, then let's say a roast beef restaurant, let's say of a gas station.”

“Okay, and I don't want to get into a debate but I just want to get it clarified, if you want to clarify this and if you want to offer the council some information or not, but in the hotel's particular case, if I understand it correctly, not every client — not every person is, is taxed, double or more than they would have been if that exemption hadn't been there only if you stay,” said Councilman Tim Navarre, operator of the local Arby’s restaurant. “And again, it depends on the price of the room. But more than likely, as you stated earlier, the economics of such that would probably mean three days or more before they would get close to the maximum.” 

“That’s very close, you're very close. I wouldn't use the word exemption. Rather, I would use the word policy or a specific ordinance,” replied Bannock. “Now, so here's what I will tell you — you can look this up on the Google if you want to, a room for tonight at the Uptown motel is $149. So you would be right. Obviously, room rates fluctuate based on a couple of different things largely occupancy. 

“What I am not prepared to share with you in a public meeting is how much our average customer bill is. One of the reasons is because at least one if not two of my competitors are attempting to listen to this meeting tonight. And that's kind of a trade secret. 

“But think about it this way,” Bannock continued. “Why would I be wasting my time here with you if you were right and if none of that math mattered? Because, you see, at the Uptown Motel that math does matter.”

The math that mattered at the meeting though, was the final vote whether to support the borough’s bed tax initiative. With Council members Glenese Petty and Robert Peterkin dissenting, the motion passed 4-2.

Also on Wednesday night the Kenai City Council passed a general fund budget of $16,551,301, out of a budget of $30,446,176 for all city fund accounts. The budget includes a 2 percent increase in the city’s salary schedule as well as commits a half-a-million dollars to road and infrastructure renovations and improvements. 

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