The Kenai Peninsula Borough Assembly this month extended by 60 days the deadline for its Tourism Industry Working Group to create a report on its recommendations after the group failed to approve the draft document on a 3-3 vote.
The draft final report, which was rejected by the working group April 10, says the group doesn’t support a bed tax, as was proposed in 2024 and which triggered the creation of the body. Instead, the report champions a modification of the borough’s 3% sales tax to a new seasonal model — 2% in winter months and 4% in summer months.
“The Tourism Industry Working Group recommends that the KPB Assembly evaluate adoption of a seasonal sales tax as a practical solution to boost revenue, ease the tax burden on residents, and support KPB’s economic growth, and send it to the people for a vote in the Fall of 2025,” the document reads.
During the prior meeting of the group, on Feb. 26, Borough Finance Director Brandi Harbaugh said the seasonal model would increase borough sales tax revenue by a projected $4 million.
Kenai Peninsula Borough Mayor Peter Micciche, who also chairs the working group, said he supports the sales tax proposal because it wouldn’t “penalize” any specific industry. He said it would provide for a property tax mill rate reduction for property-owning residents by increasing sales tax revenues from visitors. The borough doesn’t need to consider a bed tax to increase revenues, he said.
Members of the group at the Feb. 26 meeting said they were supportive of the idea — including Duane Bannock who pointed to the lowered sales tax in winter months when energy bills are elevated — but no discussion was made about what their recommendation should look like, even as they acknowledged their next meeting would likely be their last before the April deadline to submit a report.
The group did not officially voice any intent to compile a report or describe what recommendations it should include. Micciche said the document presented on April 10 was penned by borough administration.
The report was defeated on a 3-3 vote during the group’s April 10 meeting, with the three representatives of the tourism industry all in favor, and the three representatives of the community all opposed.
All three of the tourism representatives said that they will not support any “targeted” taxes.
Each of the community representatives said they felt the group didn’t have enough information about the two proposals — bed tax and seasonal sales tax — “to make a good decision.”
The Kenai Peninsula Borough Assembly on April 15 unanimously approved the resolution extending the report deadline. The working group will have two more months to compile their report and send it to the assembly by the end of June.
As of Friday evening, the next meeting of the Tourism Industry Working Group had not been scheduled.
Full recordings of the meetings of the Tourism Industry Working Group can be accessed at kpb.us under “Local Governance & Permitting,” then “Leadership & Governance,” then “Working Groups & Initiatives.” To listen to the recordings, the file downloaded from the borough website has to be opened as a text document, then fed into an application that can accept network streams like VLC Media Player.
Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.
