City Council votes down bed tax increase; approves property tax decrease

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FAIRBANKS, Alaska An increase to Fairbanks' bed tax was voted down last night at City Council. The bill was originally proposed last December by Mayor Jim Matherly. It called for a tax increase to hotels and motels in the city limits on top of their current 8% tax. In three years, it would have gone up 2.5%, with a 1.5% increase for this year. All of that income would have gone towards the city's general fund.

Fairbanks City Council decided against increasing the bed tax by 1.5% for this year.

Community members who spoke against the resolution said the increase would have a negative impact on tourism and other markets in the community. A lot of those giving testimony were owners or workers in the industry. Chamber of Commerce President Marisa Sharrah said her organization in not currently in favor of any new tax, and they are especially against any tax that focuses on one industry.

Public testimony got heated with community members calling the Mayor 'mean spirited' and 'ungrateful' for suggesting the resolution. Despite voting unanimously against the tax increase, City Council members defended the Mayor's action. Matherly spoke on the problems the taxes were meant to address and how they affect tourism.

"But I will tell you some of the things I know that will hurt tourism, is public safety," said Mayor Matherly. "The issues were having with public safety and down town, it will hurt tourism. So will snow removal. So will inebriated folks who harass visitors’ downtown. We're trying to implement some things to help, but we know that it's a problem. City infrastructure that doesn't get addressed is also kind of out there, kind of waiting like a spider to pounce and it's not good for tourism either."

Also at last night's City Council meeting, Council Members approved lower property taxes for this year. In 2018, the mill levy, which determines the amount of property taxes, was at 6.9. This year's mill levy is down to 5.8.

According to Council Member Jerry Cleworth, the drop has less to do with work the council has done, and more to do with the sudden drop in legal claims against the city. Claims dropped $2 million dollars this year. 2018 hard a large number of settlements against the city due to water contamination caused by PFAS in firefighter foam. A large portion of the $4.9 million dollars paid in claims last year went to connecting houses to the city water system. With a lot of that work done, the mill rate for claims fell almost in half.

The other two factors of property taxes, voter approved services and the charter approved calculation, are currently at a set rate. The effective date of the lower tax level is July 1st.