City services, city revenue needs, and the bed tax

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While we advocate for higher levels of city services, it is not clear that a higher level of service will cost more. 

What follows is the gist of a letter the Downtown Association wrote to Mayor Matherly on Ordinance #6084, which would increase the bed tax substantially over 4 years to fund general government. 

Given the importance of city services to the quality of life in Fairbanks and to downtown’s daily functioning, the Downtown Association of Fairbanks is concerned about the impact state spending reductions may have on city services.

Snow removal, care of crosswalks and year-round maintenance in the city’s rights-of-way may be impacted.  Downtown is disproportionately dependent on city services due to its many daily users.  In light of the probable state funding cuts, the Downtown Association supports the city in seeking funding extensions or capital matches from the state, and exploring new tax structures or sources of revenue to support core city services. 

The city has realized budget surpluses in recent years. For a decade, the Downtown Association has defrayed city expenses – contributing to the city’s surpluses – by funding the Community Service Patrol, donating to the city annually the $110,000 that we aggregate from individual and corporate donations and grants. Fundraising for a core city service has its pros and cons, and it is rewarding to play what appears to be a vital role in this instance, in addition to our efforts to attract investment downtown. 

If budget surpluses are a thing of the past, additional revenue goals should not be fulfilled by a sole, industry-specific tax.  As my board had me convey to you on April 12, the Downtown Association opposes Ordinance #6084 as written.  The Downtown Association agrees with Explore Fairbanks that the bed tax is different and believes the visitor industry represents a vital inflow of new funds to the local economy, and increases in bed tax should be used strategically to further strengthen that sector’s economic contributions.  As to Fairbanks’ year-round needs of building and maintaining a community, Fairbanks can pay its own way by spreading the costs of community across its broad base.

Thank you for your consideration.