The ballot in October municipal elections will not ask Fairbanks North Star Borough voters if they approve of the borough increasing its hotel-motel tax from 8% to 12%.
That’s after the borough assembly overwhelmingly rejected an ordinance Thursday that proposed putting the question before voters.
Commonly known as a bed tax, the rate is applied to bookings at hotels and other short-term rentals, like Airbnbs. Unlike some other taxes, any increase to the borough’s bed tax must earn the approval of local voters.
Assemblymember Tammie Wilson had introduced the idea of raising the rate as a way to put downward pressure on property taxes, which make up the majority of borough tax revenue. She had framed the ordinance as a mechanism for shifting more financial support of borough facilities to tourists and had said that voters “had a right” to weigh in.
But on Thursday, she told the assembly and audience that conversations with people in the visitor industry over the last couple weeks caused her to do a 180.
“I’m gonna just say: Thank you to everybody who came. I’m gonna ask my [fellow] assembly members to, once this gets done and on the floor, to please vote no,” she said.
The Fairbanks Chamber of Commerce, hotel owners and leaders from the tourism marketing agency Explore Fairbanks had been signaling formal opposition to the ordinance since its inception.
And even after Wilson’s opening remark, about a dozen visitor industry representatives went on to deliver public comment Thursday, none of them in favor.
They argue that the industry already contributes to borough revenues, not only via existing bed taxes but also through their operations’ property taxes. Commenters also said that bookings are down this year and that it’s the wrong time to look to tourists for more money.
“Needless to say, it’s tough in the tourist business right now. And having – raising these taxes is just to me a form of insanity, just total insanity,” said Bernie Karl, who runs Chena Hot Springs Resort.
The ordinance wouldn’t have raised the bed tax without voter approval, but some commenters said they anticipated the increase would have gathered enough support to pass. Assemblymember Scott Crass agreed with that prediction, and he said that’s not necessarily because it’s good policy.
“It’s because it’s easy to look at someone else’s wallet. We look at our visitors and think, ‘Oh, well, we’ll have them pay for it, we’ll have them pay for our parks, we’ll have them pay for the services that we need,’” he said. “I think it’s important that we’re responsible for the government that we want, and that we pay to support the community that we want.”
The assembly failed the ordinance 8-1. Assemblymember Nick LaJiness was the sole yes vote.