This summer, you may be joining visitors aboard a riverboat cruise or pause to help a sightseer navigate downtown. These guests are among the nearly 400,000 who journey year-round to the Fairbanks North Star Borough. Here they enjoy the attractions, tours, natural environment and hospitality of Alaska’s Golden Heart. In general, our guests leave their hard-earned dollars in our community and return home with lasting memories.
Visitor spending totaling more than half-a-billion dollars has a positive economic impact on our community. Of immeasurable value is that these expenditures contribute significantly to our quality of life. Because of visitor expenditures, residents have more flights to choose from, regular and increased Railbelt passenger service, meeting facilities, quality attractions and tours to enjoy.
Behind the scenes of the local travel industry are hundreds of entrepreneurs and managers who invest in and work hard to create products and services that combine to make a first-class visitor destination.
These tourism businesses employ more than 5,000 people in the borough. Tourism ranks second in the number of employees in a list of the six primary industry clusters here. According to an Oxford Economics study, the travel industry is the front door to a promising career for one-third of Americans. Locally, these success stories are relayed by many of your family members, friends, neighbors and perhaps even yourself.
Tourism companies are good corporate citizens in our community. Many generously provide donated tickets, tours, meals and more for nonprofit fundraisers. The 17 Fairbanks Visitor Industry Walk for Charity events have generated a total of $367,520 for local 501(c)(3) organizations.
Tourism enterprises pay a notable portion of property taxes. Property tax is a broad-based tax that evenly distributes support of government services across all private-sector segments of the economy. Hotels are significantly represented in the top 50 property tax payers in the borough — 20% are hotels. In the city of Fairbanks, 17% of the top property tax payers are hotels.
Those guests who partake in alcohol purchased at local restaurants, bars and liquor stores contribute to alcohol taxes. And, more recently, we hear from the cannabis industry that guests are adding to marijuana tax collections.
On top of these taxes already mentioned, our visitors pay an additional 8% hotel/motel tax, also known as the bed tax, on their overnight stays in the borough. In the city of Fairbanks, 22.5% of this bed tax is used to support general services.
On Monday evening, the Fairbanks City Council will consider an ordinance that proposes to raise the lodging tax from the current 8% to 10.5% over a three-year period with the 2.5% increase going entirely to fund the city’s general services. Originally introduced more than eight months ago by city Mayor Jim Matherly, this proposed tax hike targets only the local travel industry and our guests. The ordinance creates an inequitable scenario among industries by singling out only one industry to fund government’s general services.
As originally intended when instituted in 1979, the majority of this bed tax is reinvested into destination marketing and related programs through Explore Fairbanks. On Oct. 23, 1996, Dr. William Wood who had been city mayor in the late 1970s, wrote a guest opinion in the Daily News-Miner titled “Bed Tax isn’t for General Government — surcharge exists only to attract visitors, industries.”
The Downtown Association of Fairbanks, Greater Fairbanks Chamber of Commerce, Alaska Hotel & Lodging Association and Alaska Travel Industry Association have joined with Explore Fairbanks to oppose this tax increase.
Tourism is a wise investment. By preserving the lodging tax dollars for the advancement of the travel industry, the city is proactively fostering a proven economic development tool. Support for tourism ensures that the industry continues to be a job creator, tax revenue generator and have a positive impact on the lives of people here in our community.
Kathy Hedges is a 30-year veteran of the travel industry and serves as the chair of the Explore Fairbanks Board of Directors. Deb Hickok has been a professional in the field of destination marketing and management for 37 years and has served as president and CEO of Explore Fairbanks for nearly 20 of those years.