HomeMy WebLinkAbout11122024 Randy Wells Laydown 2 Bed Tax increaseIntroduction of Ordinance 2024-014: Revising Seward City Code Section 5.45.015(A) Hotel/Motel
Room Tax – Levy of Tax, to Increase the Hotel/Motel Tax Rate from Four Percent to Eight Percent,
Effective January 1, 2025
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To: Seward residents, Alaskan residents, Seward business owners, & Seward visitors
From: Randy C. Wells, City of Seward City Council Member
Date: November 12, 2024
Subject: City of Seward Administration, Proposed Bed Tax Increase
I would like to begin by acknowledging the complexity of this budget process, not only
for the council but also for the administration and especially for department directors. I
extend my sincere gratitude to the local business owners and residents who took the
time to communicate with me in a respectful manner. Unfortunately, this level of civility
was not universal in all public interactions.
I want to reaffirm my consistent opposition to new taxes, including the proposed bed
tax. My support for this measure was solely based on my commitment to our city
employees, whom I consider to be the City of Seward's most valuable asset, rather than
a liability.
Given the current timeline and the low probability that the State of Alaska or the Kenai
Peninsula Borough (KPB) will implement a bed tax during 2025, I am willing to postpone
my support for any bed tax increase. However, as a community, we should be prepared
to raise the bed tax if it appears that the state or KPB are going to implement such a
tax.
It's crucial for us to proactively explore options for implementing a bed tax before the
State of Alaska or the Kenai Peninsula Borough does so. The City of Seward, alongside
local businesses, invests significantly in supporting our business community through
marketing efforts and enhancing our city's appeal to visitors. While it's likely that the
State or Borough will introduce a bed tax in the future to fund local needs, it's imperative
that we retain as much revenue locally as possible. If this means implementing a bed
tax preemptively, we should seriously consider this option. Fortunately, we have time to
make a well-informed decision.
Introduction of Ordinance 2024-014: Revising Seward City Code Section 5.45.015(A) Hotel/Motel
Room Tax – Levy of Tax, to Increase the Hotel/Motel Tax Rate from Four Percent to Eight Percent,
Effective January 1, 2025
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Regarding the wage increase for our City of Seward employees, I firmly believe this is a
necessity. After discussions with the Administration, it's clear that we can make budget
adjustments, pending Council approval. Our current administration has maintained a
commendably conservative approach to revenue forecasting. However, by adjusting the
sales tax revenue projection to align more closely with our actual 2023 income, we
could increase the budget and fully fund the wage increases for our city employees.
Another viable option is to reduce the allocation to the hospital fund from 1% to 0.5%.
This would maintain a balanced budget while still funding the City of Seward wage
increase. We could implement either of these options or adopt a hybrid approach,
partially increasing the revenue projection while retaining a portion of the 1% tax for the
hospital fund. It's worth noting that the hospital currently has $3 million in reserves for
emergency expenses, providing a financial cushion.
In conclusion, we have multiple viable options to address both the bed tax situation and
the necessary wage increases for our city employees. By carefully considering these
alternatives, we can make decisions that best serve our community's interests while
maintaining fiscal responsibility. Our goal should be to strike a balance between
supporting our workforce, maintaining essential services, and ensuring the long-term
financial health of our city.
City of Seward Council Member
Randy C. Wells