The Kenai Peninsula Borough Assembly is considering a modification of its sales tax from a flat 3% to a seasonal model of 4% in summer months and 2% in winter months. The move will be considered at the group’s Aug. 5 meeting and, if approved, will be subject to voter approval.
The idea of a seasonal sales tax rate was raised and recommended in the final report of the borough’s Tourism Industry Working Group, which met from December to May to consider the impacts of tourism on the borough. An ordinance introduced by Assembly Vice President Kelly Cooper — who also served as vice chair of the working group — says that the seasonal sales tax will increase borough revenues without increasing the cost to borough residents.
“For permanent residents of the KPB, if approved by the voters, this seasonal sales tax structure is expected to result in a likely reduction, or at worst net-neutral change in the total annual sales tax paid,” the ordinance reads. That projection is based on the idea that residents spend more on utilities and fuel in the winter months — the ordinance also cites “holiday spending.”
A fiscal note by Borough Finance Director Brandi Harbaugh projects an annual increase in revenue of around $4 million, which Cooper says she expects will be translated into a mill rate reduction for borough residents who own property.
Another measure being considered by the assembly at their Aug. 5 meeting would create a Seasonal Tax Working Group to explore the impacts of the seasonal rate. Tyson Cox introduced the resolution because he says he’s unconvinced that the impact to residents has been well enough considered.
The working group approved their final report recommending the seasonal sales tax unanimously only after it was amended to include an additional suggestion for the borough to take no action. That document cites data from the borough finance department in describing the increased revenue — but doesn’t say that residents will pay less or even a flat amount overall in sales tax.
A full recording of the meeting and the text of both the seasonal sales tax ordinance and working group resolution will be available at kpb.legistar.com.
Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.
