Fairbanks council votes down room tax waiver cutting Explore Fairbanks' share

The Fairbanks City Council voted 1-4 on Nov. 9 against advancing a one-year waiver of the city's room tax formula that would have cut Explore Fairbanks' share of bed tax revenue. A revised version giving Explore Fairbanks $200,000 more is on the council's Nov. 17 work session agenda.

Council members Valerie Therrien and Crystal Tidwell proposed the waiver earlier this month. It would have suspended the city code formula that divides bed tax revenue so the money follows Mayor Mindy O'Neall's draft 2027 budget, which lists about $725,000 less for Explore Fairbanks than the formula would provide.

Therrien cast the only yes vote. Council members Aaron Lojewski, Jerry Cleworth, John Ringstad and Sue Sprinkle voted no, and Tidwell was absent.

Therrien said the waiver needed to be on the table so the council could decide whether to support the mayor's budget. Lojewski said the mayor's budget "doesn't change the formula, but it ignores the formula." Cleworth opposed changing a formula the council set only three years ago: "It says temporary but once you get used to the money it won't be temporary."

O'Neall, who presides over the council, said her budget does not change the formula and that she had met the code for each recipient. She said that if bed tax revenue rises, the first $200,000 should go to Explore Fairbanks, up to $2.2 million, with the rest split 50-50.

Scott McCrea, president and CEO of Explore Fairbanks, said his group built its 2027 budget on about $2.7 million from the city under the formula and is drawing about $500,000 from reserves to balance it. He said cutting destination marketing "by more than $700,000 is simply not a strategy for sustaining that success." He warned that a temporary waiver could be repeated by future councils and mayors.

Julie Jones of Festival Fairbanks, which maintains Golden Heart Plaza, supported more money for the plaza but not at another organization's expense.

The revised waiver, sponsored by Therrien and not yet introduced, keeps the formula suspension but sends any revenue above projections first to Explore Fairbanks, up to $2.2 million. The revision moves $200,000 from economic development to Explore Fairbanks, raising its share from $2 million to $2.2 million and cutting economic development from $910,000 to $710,000.

The same packet includes O'Neall's draft 2027 budget ordinance, also not yet introduced. It would raise the mayor's salary from $87,500 to $100,000 starting Jan. 1, 2028. The city charter bars a raise from taking effect until a year after adoption. In January, the council voted 1-5 against advancing a raise to $136,000.

The draft budget shows about $51.9 million in General Fund spending against about $47 million in revenue, with a $6.1 million transfer from the Permanent Fund. The administration plans to introduce it Nov. 23, with a public hearing Dec. 3. Council members agreed to adopt it by Dec. 15.