The Sitka Assembly on Tuesday advanced changes to the city’s sales tax exemption for senior citizens.

For weeks, Assembly members have been considering limiting the exemption to low-income seniors. Right now, it’s available to anyone over age 65.

The changes made Tuesday night are less restrictive than the Assembly’s original plans.

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The Assembly changed the income level needed for seniors to be exempt. Instead of twice the federal poverty level, it’s now three times. That puts the income limits at about $43,000 for seniors registering by themselves, or about $59,000 if they’re registering as a couple.

A cash register prepares to ring up a tax-exempt purchase at Brenner's Fine Clothing & Gifts. The Sitka Assembly advanced changes to the city's senior citizen sales tax exemption. (File photo)

Those who already have the exemption are grandfathered in to the program. But anyone who applies after the ordinance takes effect will need to obtain a city-issued photo ID and allow the city to check their last IRS tax return if there are doubts about their income.

Members of the public who showed up to testify had criticisms and questions. Here are some excerpts:

Sarah Williams: “It’s very easy to shop out of town. Then you don’t have to pay tax. I went to Juneau city offices and I paid $20 for a tax exempt card. They told me I can use that tax exempt card all my life.”

Shirley Robards: “If it does pass I want to know how long and how many signatures I have to get to put it back on the ballot again so we can vote it down.”

Mary Lou Villandre: “It’s the IRS thing that has me baffled. I’ve heard a lot of gossip out of the city offices about people. To me, my accountant, me and the IRS are the only ones that should know. You cannot keep all your employees quiet. There’s just no way you can handle that.”

Alice Johnstone: “Who is going to police this? Who is going to tell that somebody cheated? It’s not going to be the employees of a store in town who know that someone is coming in there and they’re cheating.”

John Littlefield: “I’ve got in my pocket, I’m sure other people have shown you, a City and Borough of Juneau tax-free card for 65 and over. I got it about a month ago. Paid them $20, they took my picture, and gave me and my wife one. That’s it. End of story. No means test, no background investigation. I think you guys are being real short-sighted here. When you cut these down as others have mentioned, we have other options to spend our money.”

The testimony seemed to fire up Mayor Cheryl Westover, who especially took issue with the notion that Sitkans would just go shop in Juneau.

“We all live here,” Westover said. “We have to make this a community. I don’t care what Juneau does, because Juneau has all kinds of ways to bring money into their community. We don’t. What you could help us do is figure out how to get a dock out here so those people coming off (cruise ships) can pay to shop downtown and help our merchants. But no, you come here and you ask us to be creative when we’re out of ideas to be creative.”

Westover called the tax exemption a gift, not something people have paid for and deserve.

“You can’t just sit back and say ‘We’ve lived here and worked here 10, 20, 30, 40 years’ – some people, even 5 years – and now they want to sit back and enjoy the infrastructure and let everybody else pay,” she said. “I think that’s real selfish. I don’t understand it.”

Assembly member Pete Esquiro said he didn’t know how he would vote. He said he understood the need for the city to raise some money and find some ways to fund its infrastructure.

“But I’m also a little frustrated,” he said, at himself and at the process. Last week, when the city was considering its budget, it added back in many of the cuts proposed by city staff.

“And then this week we’re going back to the seniors and saying ‘But it’s urgent that we do something about the senior tax exempt status right now,'” Esquiro said.

He ended up voting ‘No’ on the changes, as did Westover. The matter passed 5 to 2. Tonight was to be the last word on it, but because of the changes made, it will come back up for one more vote at a future Assembly meeting.

If approved, the changes would take effect in 2013.

The tax cap
The Assembly postponed indefinitely a plan to change the city’s sales tax cap. Right now, Sitkans pay sales tax on only the first $1,000 of a purchase. The proposal that’s now placed on hold would raise that to $1,500.

Assembly members had hoped to settle the issue Tuesday night. But attempts to clean up the language appeared to raise questions about how the tax cap works.

A lengthy debate took place about the kinds of sales that could be considered under one invoice, and what items would count toward the cap.

The Assembly also advanced the city’s 2013 budget without any discussion. That doesn’t mean the debate is over. Tuesday night’s meeting was the first reading of the ordinance; members will have time to make adjustments to the budget at future meetings.

The Assembly has been considering changes to the tax cap and the senior sales tax exemption for months. Here are some earlier stories:
Assembly considers end to senior sales tax exemption, raising cap (Jan. 25, 2012)
Tax panelists share problems, offer few solutions (Feb. 2, 2012)
Sitka to limit tax break to low-income seniors; tax cap uncertain (Feb. 15, 2012)
Sitka tax cap would go up to $1,500 under new plan (Feb. 16, 2012)
Tax changes bring more testimony, little action (Feb. 29, 2012)
Show us the cuts: Assembly to delay tax hike until budget out (March 7, 2012)