HomeMy WebLinkAbout11122024 Tom Tougas Laydown Bed Tax SurpriseL �, J 0,� I 1 b24( -q
Surprised Tom Tougas Nov. 1124
In 2024 We are having the Biggest Revenue Year Ever for the City Of Seward, Sales Taxes are
the Highest EVER, Bed Taxes are at record levels, Investment Income is Huge and the City's
Cash and investment account is at $59,317,386. (CityACFR 12/31/23 Page 38) At 4% the
Interest income on $59 million is $2,360,000. 1 realize that only about $14 million is General
Fund Investments so at 4% that's $560,000.
So I thought we would be in for a peaceful Winter and Budget cycle. The November
SURPRISE was when the administration proposed to DOUBLE the Bed tax. We are
Confused and asking WHY? Since 2018 the city Revenue from the Bed Tax has gone from
$556,000 to $840,000 in 2023. Where does that $$ go?
29 years ago we voted for this Bed Tax because we were told that 50% of it would go to
Marketing at the Chamber and 50% would be used to Fund Infrastructure projects in Water,
Sewer and Electric. As far as I know these funds have never been used for infrastructure
projects but annually these funds have been swept into the Investment account. This is
part of the Reason that the account is Over $59 million.
In the 511 WHEREAS, the administration says that these new funds will be used for
"Destination Marketing" "Infrastructure" and other general services. I understand that the
City has not been using the full 2% for funding the Chamber so why do they now say that
they will Double it?
I estimate that around 3 million has been collected over the last 29 years for the other half
but not been spent on the infrastructure but instead ended up in the Investment fund in
New York.
Unfortunately, Seward has a History of passing utility rates increases and taxes at budget
time and telling the public that they will be used for infrastructure upgrades SO the Rates
Go Up but the work never gets done. Locals get stuck with higher utility bills but the
revenue ends up in the Investment Fund.
I couldn't understand WHY the administration wanted to double the Taxes until I got to Page
97 of the Proposed Budget. The Proposed Budget for Sales Tax is $850,000 Less than 2023
actual and at least $1,400,000 less than 2024 actual. (we should have the 3rd Quarter
actuals from the Borough this week to firm up that number.) To be Conservative if we add
just the $836,000 which is the 2023 actual its more than the $694,533 in the proposed
Doubting of the Bed Tax. If we just put Real (but extremely conservative Numbers in the
Budget the "Crisis "goes away.
Also, on page 95 it says that investment income in 2023 was$579,365 and in the first 6
months of this year investment income is $1,359,899. Why is the Budget for 25 and 26
$260,000 for interest income.
What is the Largest Hotel in Seward? It's Windsong on Exit Glacier Road, it twice as big as
the Harbor 360. Why? They have a 3% Borough sales Tax. We have11 % Now and 15% if this
Passes. That's a $40 to $60 per summer room rate difference. For a Bus Group of 25 to 30
rooms that's $1200 to $1600 difference just in the Tax. The Group operators always want
me to lower my rate by $50. Per room to make up for the Tax Difference.
If this passes it sends a Clear Message that the city wants all future investment outside the
city limits. What is the message that the Council is sending?
At the Post Office yesterday a nightly rental operator told me that "Its to Punish the Nightly
rental operators"
Others have told me that its about communicating to Royal Caribbean that they want the
ships to come but they don't want the passengers to stay in town?
I've also heard that its to preempt a decision by the Kenai Peninsula Borough implementing
a Borough wide Bed Tax. When this came up last summer at the Borough assembly the
Mayor Tabled the resolution and appointed a "Tourism Working Group" to discuss the
options and particularly the inequities between the cities that have Bed taxes and the
others in the Borough. I have been appointed to this working group, We haven't even met
yet. I think this is going to be a Very Long Process. I will keep the Council Posted on the
developments as they occur. To Raise Taxes now because of a CRAZY proposal at the KPB
that was tabled at the first meeting because of strong opposition is irrational.
Unfortunately, there has been No Communication between the City and the Lodging
industry about the impact this will have on our businesses and the message this sends to
the Visitor operators.
We have a wonderful situation here in Seward, I'd hate to have this tarnish our reputation.
Tom
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024 est
2025
11/12/24 Seward: Sales & Bed Tax History Report 2010 - 2024
CitySalesTax CitySalesTax 3%Surplus
Rev4%Actual Budget Surplus4% intoGF
A C D E
3,742,751
3,807,000
(64,249)
(48,187)
4,147,010
4,026,000
121,010
90,758
4,189,330
4,165,000
24,330
18,248
4,583,057
4,544,632
38,425
28,819
4,535,707
4,345,549
190,158
142,619
4,883,996
4,909,151
(25,155)
(18,866)
5,004,992
4,958,689
46,303
34,727
5,160,344
4,900,000
260,344
195,258
5,326,427
5,300,000
26,427
19,820
5,674,689
5,350,000
324,689
243,517
3,805,487
5,523,175
(1,717,688)
(1,288,266)
6,861,114
5,602,000
1,259,114
944,336
7,635,648
6,000,000
1,635,648
1,226,736
7,856,783
6,500,000
1,356,783
1,017,587
8,100,000
6,500,000
1,600,000
1,200,000
8,100,000 7,020,000 1,080,000 810,000
2025 8,100,000 8,100,000 0 0
proposed
Bed Taxes
Bed Taxes
4% Bed Tax
Actual
Budget
Surplus
F
G
H
328,396
302,600
25,796
334,824
308,652
26,172
380,210
340,000
40,210
408,256
350,000
58,256
421,981
385,000
36,981
458,605
388,850
69,755
505,845
414,996
90,849
520,907
420,000
100,907
556,065
525,000
31,065
591,674
500,000
91,674
217,434
644,000
(426,566)
713,633
673,175
40,458
804,511
675,000
129,511
840,428
725,000
115,428
840,000
725,000
115,000
840,000 694,533 145,467
(50%)
840,000 840,000
Unaudited -for discussion
Total4% Sales Total4% Sales
& Bed Tax
& Bed Tax
%Actual
Actual
Budget
vs Budget
I
J
K
4,071,147
4,109,600
100.9%
4,481,834
4,334,652
96.7%
4,569,540
4,505,000
98.6%
4,991,313
4,894,632
98.1%
4,957,688
4,730,549
95.4%
5,342,601
5,298,001
99.2%
5,510,837
5,373,685
97.5%
5,681,251
5,320,000
93.6%
5,882,492
5,825,000
99.0%
6,266,363
5,850,000
93.4%
4,022,921
6,167,175
153.3%
7,574,747
6,275,175
82.8%
8,440,159
6,675,000
79.1%
8,697,211
7,225,000
83.1%
8,940,000
7,225,000
80.8%
8,940,000 7,714,533 86.3%
8,940,000 8,940,000 100.0%
3% Sales &
Bed Tax
Surplus
L
(22,391)
116,930
58,458
87,075
179,600
50,889
125,576
296,165
50,885
335,191
(1,714,832)
984,794
1,356,247
1,133,015
1,315,000
Unassigned GF
Cash Balance
@ YE (3-6 mos)
M
3,510,000
4,827,000
5,948,459
4,698,970
4,718,517
4,873,463
4,600,000
6,116,451
7,000,000
9,764,406
11,304,000
11,133,749
13,057,146