Bed tax increase ordinance postponed

By  | 

FAIRBANKS, Alaska - Fairbanks Mayor Jim Matherly has introduced an ordinance to increase the bed tax rate of hotels and motels but the city council was quick to postpone the measure. Hotels charge their own rates on rooms, the city does not. The city simply sets a tax on that good. The current bed tax rate is eight percent. As an example, Matherly explained that if a room is $100 per night, the city would collect eight dollars in tax.

In Matherly's ordinance, the current tax rate of eight percent would increase by one and a half points to 9.5 for 2019. It would then climb an additional half point to 10 percent in 2020, followed by another .5 percent gain in 2021, to 10.5. Taxes like these are collected and used for general city services.

According to the fiscal note attached to the ordinance, if this bed tax increase is enacted over the course of three years, $2.4 million would be raised for city amenities. Matherly said in order to make a balanced budget to fund those amenities, there needs to be a compromise, "But the question becomes do we cut services or cut people or do we look for other revenues. It's always going to be controversial, it will always make some people unhappy and some people will like it. So I figure let's give a try at the bed tax,” he said.

The council decided to advance the bed tax discussion to the first meeting in December, which is Monday the third, in order to get a better idea on the 2019 budget.
There will be at least one new council member at this time, as current member Joy Huntington will be vacating her seat.