DENALI PARK - Two separate tax proposals will appear on the November ballot in the Denali Borough, so voters will decide whether to institute a tax on marijuana and alcohol or increase the bed tax, or neither.
That decision came after a 4 1/2-hour meeting Wednesday night that included two hours of compelling testimony from hotel operators and local residents.
The general thinking going into the meeting was that the Denali Borough Assembly would choose between the two proposed tax ordinances. Taxes cannot be instituted in the borough without a vote of the people, according to the borough charter.
But the assembly was not comfortable making that choice and wanted to allow voters the opportunity to choose for themselves.
The first proposal calls for a 5% tax on alcohol and marijuana. The second calls for a 0.5% increase in the bed tax, bringing that tax to 7.5%. The assembly approved dropping the originally proposed 1% increase to 0.5%.
Mayor Clay Walker is the first Denali Borough mayor in more than 20 years to propose taxes, and these taxes would not take effect until 2021. He did it, he said, to try to be proactive as funds decline from the state of Alaska and to keep the borough afloat in the future.
During testimony, some residents even proposed alternative taxes such as a fuel tax, a utility tax, or excursion tax to avoid targeting specific businesses.
“A good tax is something not targeted to one industry or another,” said assembly member Krista Zappone. “Both of these are targeted at one group. Neither of these are favorites of mine, but I recognize the need.”
Several people expressed concern that Denali Borough residents aren’t paying their fair share.
“Those of us who live here year-round are benefiting from people who don’t live here year-round,” said assembly member Jake Hill.
An increase in the accommodation tax will affect the money some businesses can put into the community, said Alicia Maltby of the Alaska Hotel and Lodging Association.
“The current structure already pays its fair share,” she said, suggesting that people who live here year-round should share the tax burden.
“We contribute quite a bit,” said Tenelle Wise, manager of the Grande Denali and Denali Bluffs Hotels. “We don’t deny there are needs. It’s important to plan for the future. But going after the overnight accommodations tax every time is not necessarily the best solution.”
An increase in the overnight accommodations tax, also known as the bed tax, could stunt tourism growth in Denali, according to Bonnie Westlund, manager of Denali Princess Wilderness Lodge.
Hotels will have less money to renovate rooms, expand rooms, and improve guest services, she said.
Holland America Princess competes globally, said Ralph Samuels of Holland America Princess, and taxes hinder the company's ability to stay competitive. One of the owners of Premiere Tours, Tim Worthen, suggested the borough assembly not tax the “golden goose” and “set up a more cooperative relationship with the tourism industry.”
But local resident Steve Jones disagreed.
“They don’t pay property tax in this borough and they do in other boroughs,” he said. “That makes this borough a real gold mine for them. I think they can very well afford a 1 to 3% increase in bed tax.”
Representatives from both cannabis dispensaries in the borough noted that cannabis prices are going down, so income from taxing that business may not be prolific. Owners of hotel bars and liquor stores testified that collecting 5% tax on alcohol will be an accounting nightmare.
In the end, the ordinance proposing a 5% tax on marijuana/alcohol passed 5-3. The ordinance proposing a 0.5% increase in the overnight accommodations tax passed 6-2. Both will be on the Nov. 5 ballot.
Reach columnist/community editor Kris Capps at firstname.lastname@example.org. Call her at the office 459-7546. Follow her on Twitter @FDNMKris.