With the declared intent of enhancing the local tourism industry, the Soldotna City Council approved at their meeting on Wednesday night a 4% lodging tax.; the tax will be levied against hotels and short term rentals within the city.
The ordinance states, “lodging taxes provide the city with a mechanism to diversify our tax base and provide additional funding for city tourism operations,” and this is the primary intent of the “bed tax.” In fact, the ordinance stipulates that a unique fund will be established for revenue generated from taxed income. Proceeds from the “Tourism Enhancement Fund” will be distributed at city council discretion to various tourist related establishments and programs in the City of Soldotna, including the Soldotna Regional Sports Complex, the Soldotna Field House, and Soldotna Creek Park.
The lodging tax has been a divisive issue since it was introduced during the last city council meeting, and has received substantial feedback from members of the community, several of whom showed up to speak during the ordinance’s public hearing on Wednesday night.
A representative from the Aspen hotel, Kelly Johnson called the tax an act of “questionable integrity,” and pointed out that the lodging industry is not subject to the city’s $500 tax cap rule, and suggested the elevated out-of-pocket costs could drive hotel patrons to neighboring communities, like Kenai, for their hotel stays rather than Soldotna. This, Johnson said, could also lead to lost economic revenue when tourists patronize businesses near their hotel, and not in Soldotna.
Brian Shackleton, a Soldotna local, said, “I don’t know that there’s very much public outcry for this tax. I don’t believe it’s really necessary.”
The council was also divided on the issue.
Councilmember Dave Carey, who was vocally opposed to the bed tax, asked why the city is imposing a new tax when for many years it has regularly operated with a budget surplus;
“I have directly voted on over a dozen city of Soldotna budgets. At no time was it stated that the city did not have enough money to provide the necessary services for the community. In fact, we’ve had a surplus every year. If the City of Soldotna has uncovered since the bond issue for the Field House, a new financial crisis in 2023, what are the other groups and activities that we’re going to consider placing taxes on? Which other industries or groups are going to be taxed higher because of their success, or because they have decided that Soldotna is their desired home? Might some see this as a statement that Soldotna does not want people doing business here?”
Carey also noted that many of those who come to Soldotna are not tourists, but family and friends of locals.
Vice Mayor Lisa Parker responded by reaffirming that the ordinance is not introducing any new taxation on the residents of Soldotna, and by adding the lodging tax the city is catching up to a practice already in place in most of the country.
“This is not a tax on businesses, but it is a tax on visitors who stay in our local lodging establishments. It’s not a tax on local residents, it’s a tax on visitors,” said Vice Mayor Parker. “It’s been interesting in talking to people about this issue as a lot of people. Think that Soldotna already has a lodging bed tax and they were surprised that we do not. Throughout the world tourists pay bed and lodging tax. And I have traveled around the world and I know many of you have as well and you have paid. Those taxes and those fees that are added on by the hotels that oftentimes when you make your reservation, it doesn’t show you what those additional fees are going to be, but you see it when you check out.”
The tax passed by a vote of 5-1 and will take effect in January 2025. Councilman Carey was the lone “No” vote.