The Kenai Peninsula Borough Assembly will introduce an ordinance at its upcoming meeting on Tuesday, June 18, seeking to add a potential bed tax measure to the ballots in the fall 2024 elections.
Ordinance co-sponsor and Assembly Vice President Tyson Cox says the tax has the potential for significant additional borough revenue each year. “After cost, it will be just under $5.3 million each year.”
This isn’t the first time a bed tax has been brought before the assembly. The Assembly defeated ordinances in 2017 and 2018, which would have asked the voters to approve a bed tax.
In June 2019, the Assembly passed an updated version of the previous ordinances, which was subsequently vetoed by then borough mayor Charlie Pierce.
A veto override attempt by the assembly failed 4 Yes, 4 No, and 1 Abstained.
A new chapter of the borough code would be enacted if placed on the ballot and approved by a majority of the qualified voters.
Among other key components, the code would only apply to accommodations of less than 30 days, would remove the current 3 percent borough general sales tax from short-term accommodation and overnight camping rentals, and would establish a borough lodging tax of up to 12 percent on short-term accommodations and overnight camping rentals with no daily sales cap of $500.
According to Cox, who co-sponsored the ordinance with assembly member Brent Hibbert, a bed tax would offset costs incurred by the borough from visitors to the peninsula. Cox says he supports a ballot measure for the tax because he wants to know if voters support the borough footing this subsidy or if they would like to see visitors essentially covering their own costs.
“Do [voters] believe we should continue to subsidize our visitors when they come?” said Cox. “We have a high cost of services that go very high in the summer time and are much lower in the winter time, and we are the one subsidizing that.”
A memo provided with the ordinance illuminates some of the sources of these costs, stating, “The Kenai Peninsula Borough relies heavily on the several hundred thousand visitors who travel to the Kenai Peninsula each year. These visitors create a great demand for public services offered within the Borough, which impacts services such as solid waste, roads, recreational and senior citizen services, 911 and emergency services, hospital services, and disaster services.”
Cox added that a bed tax does not represent an additional cost to property owners; the renters will cover the full tax. “If I were coming here to stay in a hotel room for one night, it would cost me, not the owner of the building or the business.”
Currently, 49 Alaska cities and boroughs have a bed tax. The tax rates range from a low of 4% to a high of 12%.
Of the 19 organized boroughs in Alaska, only the Kenai Peninsula Borough, Aleutians East Borough, North Slope Borough, and North West Arctic Borough do not utilize an additional tax on temporary lodging.
If the ordinance becomes a ballot measure and voters pass it, the new bed tax will go into effect on Jan. 1, 2026.
