Assembly votes down latest bed tax proposal

Mar 7, 2018


An ordinance to put a bed tax question on the fall ballot failed Tuesday night by a vote of 5-4.

The Kenai Peninsula Borough Assembly said no once again to putting a bed tax on the fall ballot. Opponents didn’t vote the proposal down because it’s a tax. It’s just not the right tax.



The Borough can can continue the rare distinction of being a popular tourist destination with no overnight accommodations tax. Assembly member Dale Bagely has tried twice in as many years to get a ballot question to voters about nominal bed tax. This one would have been six percent. A number, Bagely noted, that is far lower than other popular travel spots.

“Anywhere you travel in the United States, in the world, you pay a bed tax. In Hawaii it’s...a total of 17 percent. When I’ve traveled around the United States, bed taxes are everywhere, and yet we don't do that here and we leave that money on the table. Most of the tax revenues we’re looking at impact Kenai Peninsula residents, and while this does to a certain extent, the vast majority of a bed tax would be (paid by) people from off the Peninsula and the Lower 48.”

That’s always been the selling point; that a bed tax is designed to target visitors, not fleece the locals. In a strange twist, what emerged during the debate was actually a call from residents for more taxes on themselves.

“I really firmly believe that the bed tax is not the way to go," Linda Farnsworth-Hutchings told the Assembly.


"I prefer the .5 sales tax because you’re going to get the people who aren’t staying in a hotel and even they stay in a hotel, they’re still paying sales tax. But you have the people who camp out in a tent or whatever that you wouldn’t  be taxing, but they all go to dinner, they go to the movies the drive through Dairy Queen. They even get an oil change. So consequently, you’re building a lot more out of that."

Hutchings pointed out one of a couple big complaints about the proposed bed tax. One is that there are too many ways around it with RV’s and campers having the easiest job of avoiding it. But also that it unfairly targets businesses, even though the customers ultimately pay the tax.

“My husband and I own the Driftwood in and AJ’s Old Town Steakhouse in Homer," said Adrienne Sweeney. "I understand that there is a budget gap and some assembly members feel that a bed tax is the solution. But what you have to understand is we are already paying a bed tax. Because lodging is not capped at $500. Our small industry already contributes a huge amount of sales tax dollars to the borough’s bottom line. Adding another tax on top of the uncapped amount that we already pay is not the solution to bringing in more sales tax dollars in our economy.”

That’s always been another mark against the bed tax. Unlike say, buying a new toaster oven where you pay sales tax once and that’s it, in a lodge or hotel, there’s a separate transaction for each person each night that gets hit with sales tax. The half a percent bump in that, to 3.5 percent, has been tossed out as another revenue generating possibility for the borough. And despite the inherent regressiveness of a sales tax, because it’s applied equally regardless of income, that idea picked up steam Tuesday night. The bed tax, however, did not, and again failed to make the ballot by a vote of 5-4.