Kenai to vote on budget, borough bed tax

The budget appropriates over $16 million in general fund spending.

The Kenai City Council will vote on the 2020 annual budget at their meeting Wednesday night.

The budget, which goes into effect July 1, 2019, appropriates over $16 million in general fund spending.

The proposed budget includes $500,000 committed to renovations and improvements to city facilities. They have also included a 2% pay increase to the city’s salary schedule, which would go into effect July 1.

The resolution to establish the 2019 mill rate at 4.35 mills is also scheduled for adoption on May 15.

Kenai Municipal Code requires that both the budget and mill rate be adopted by June 2019.

The council will also decide if the City of Kenai will support the proposed Kenai Peninsula Borough Assembly bed tax.

The tax would establish a 12% sales tax on temporary lodging and will allow for an exemption in cities that apply a separate temporary lodging tax of an amount equal to the city’s tax for a maximum of one half of the borough ‘s tax.

The ordinance has been reintroduced by Assemblyman Dale Bagley. A similar proposal has been rejected by the assembly.

According to City Manager Paul Ostrander in council documents, Kenai’s participation in the bed tax would include about 28 businesses, not including motor homes or tents.

Ostrander also said, in council documents, that the council may want to consider recommending that the assembly include the taxation or RV and tent sites.

According to Ostrander, the city enacted a 5% bed tax in 1991 which was put in place to promote economic development in the city and tourism within the city. It was suspended in 1996, because it put the city of Kenai at a competitive disadvantage when local lodging was in low demand.

“The suspension of the bed tax was due to the possibility of adverse impacts on Kenai hotel/motel operators that asserted the tax made them uncompetitive with similar businesses outside of the City of Kenai that did not have a bed tax,” Ostrander said.

The council will meet Wednesday night at 6 p.m.

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