Cordova advances a tax increase on rentals and visitors to 14%

Anyone renting a room, a car or a skiff in Cordova would pay a percentage point more under a tax increase the Cordova City Council approved on first reading Wednesday, from 13% to 14%. The rate also covers marijuana, tobacco and alcohol. Mayor Miles Smith said the tax is aimed mainly at nonlocals, though it applies to any qualifying purchase regardless of who buys it. The council adopted it by voice vote with no opposition heard.

Sales tax collections, including surtaxes, are running about $250,000 behind where the city stood at the same point last year, Smith said in reporting second-quarter figures. Third and fourth quarter are typically the city's largest.

Smith said the increase would reach his own business, and he backed it anyway. He said it lands on excess items and that "Cordova is desperately in need of a revenue increase." He also warned against leaning on the tool again: "We cannot tax our way out of issues... businesses will not be able to function if people don't come because we price them out."

The ordinance as introduced covered vehicle rentals "excluding watercraft," which would have left skiff and boat rentals outside the 14% rate. A council member moved to strike "excluding" and substitute "including," arguing skiff and boat renters draw on the same visitors. The amendment carried, though Smith questioned whether it would collect anything, since most skiff rentals in town are attached to bed and breakfasts or arranged privately rather than through licensed rental companies.

Cordova lodging and tourism operators have raised concerns in city work sessions that the community's tax and surtax structure is already at the higher end of Alaska rates, and that further increases make the destination less price-competitive, which could reduce visitor demand and undercut the revenue the changes are meant to raise. It's a familiar move in a state with no statewide sales tax, where local governments are revisiting taxes on lodging, alcohol, tobacco and marijuana to find revenue.

The ordinance still requires a second reading, which the council discussed taking up at a special meeting rather than its Aug. 19 regular one.