The City and Borough of Juneau is forecasting a “bullish” year for its 9% hotel bed tax revenues for the 2024 fiscal year, starting in July. According to the city’s current proposed budget, it expects to see around $3.42 million in revenue come from the hotels, motels and short-term rentals that operate in the capital city.
The rosy projection — which outpaces last year’s projection by around $1.3 million — isn’t necessarily unusual when accounting for inflation and the post-pandemic influx of independent traveling. However, with the significant increase in funding, the Assembly is discussing redesigning the percentage split of the funds to recognize the impacts of short-term rentals and redistribute those funds to the CBJ’s affordable housing fund.
The city splits the 9% hotel bed tax revenues by allocating 4% of it toward Travel Juneau to spend on tourism promotion ($1.52 million forecasted), 3% toward Centennial Hall operations ($1.14 million forecasted) and 2% toward Centennial Hall improvements ($760,000 forecasted.)
At the Assembly Finance Committee meeting, members voted to only allocate $1.2 million to Travel Juneau. For perspective, the amount forecasted to go toward Travel Juneau is nearly $500,000 — 49% — more in funding than allocated in the previous fiscal year.
City Finance Director Jeff Rogers said during the Wednesday meeting that he questions whether the city’s funding percentage split — originally established in 1980 — still accomplishes the Assembly’s goals, which in recent years has been largely focused on growing Juneau’s affordable housing.
“The numbers are getting big in a way that, at least on the Centennial Hall side, we don’t necessarily have expenditures to use them for,” he said.
Rogers continued to discuss whether it would be in the Assembly’s interest to transfer the amount of hotel bed tax that was accumulated from the short-term rentals that operate in Juneau and put it toward the city’s Affordable Housing Fund.
Rogers said the reallocation of the funds could help mitigate the impacts the Juneau housing market is feeling from the growth in short-term rentals.
In a recent study, data indicated that on one given day in mid-February, there were an estimated 577 active and intermittent listings of short-term rentals across Juneau. For each of those listings, the person or business offering the short-term rentals is required to comply with the city’s sales tax code, which includes charging the renter for both regular sales tax and hotel bed tax to then be remitted to the city.
Assembly member and Finance Committee Chair Carole Triem said she doesn’t think the Assembly is going to have the time during the budget-making process to redesign the funding split of the city’s hotel bed tax revenue but said she is interested in doing so in the coming months.
“I don’t think we have time to do it in the budget process, but I think there is interest in looking at that especially since there is no dedicated fund source for the dedicated fund source,” she said. “This could be that dedicated fund source.”
• Contact reporter Clarise Larson at email@example.com or (651)-528-1807.