The Kenai Peninsula Borough Assembly will consider whether to send a borough-wide bed tax to voters at its next meeting.
The tax, proposed by Borough Mayor Mike Navarre, would be set at 8 percent but would provide up to a 4 percent exemption for businesses within the limits of cities that adopt a similar sales tax in addition to the existing general sales tax levy, according to a memo to the assembly from Chief of Staff Larry Persily and Acting Finance Director Brandi Harbaugh.
After the assembly voted to increase the borough’s funding to the school district but not to adopt any tax increases, Navarre’s administration has been considering how to increase revenues to avoid spending down the borough’s fund balance. The hundreds of thousands of tourists that come to the Kenai Peninsula every year use roads and public services such as police, but there is no direct revenue to the borough other than the general sales tax, the memo states.
“While the revenue generated from this additional sales tax on temporary lodging would be used for educational purposes, as required by borough code for all sales tax revenues, it could make available property tax revenues that otherwise might have gone to educational funding to help offset such visitor costs,” the memo states.
The tax, which would affect any lodging for less than one month under the proposed definition, would generate approximately $4.3 million, according to the memo.
The measure would still have to go to the voters on the Oct. 3 regular election ballot.
The assembly will meet again July 18, with worksessions scheduled to start at 1 p.m. and the regular meeting to begin at 6 p.m.
Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.
