After more than a year of warning that Sitka must either raise new revenue or cut services, the City Assembly passed three tax measures in quick succession last night / Tuesday night (4-28-15). The proposals would increase sales taxes and double the tobacco tax.
The movement was prompted by the needs of the Sitka School District.
For at least the last year and a half, there’s been one constant refrain at the Assembly table:
Mike Reif, July 22, 2014: We have continued to kick this can down this pothole-filled road…
Pete Esquiro, Sept. 9, 2014: It’s that first kick of the can again…
Mim McConnell, Nov. 10, 2014: Trying not to kick the can down the road… [laughter]
Those were former assembly members Mike Reif and Pete Esquiro, and Mayor Mim McConnell, speaking last July, September, and November, and arguing that the city needs to raise revenue or face service cuts.
But despite the warnings, actual proposals for how to solve the problem have been in short supply. The one tax the assembly seriously considered, an increase in the motor vehicle registration fee, was dropped in the face of public opposition.
Now, that may be changing. On Tuesday night, Assembly members seemed determined to…well, to do whatever the opposite of can-kicking is.
Michelle Putz led the charge.
“If anybody pays attention, they’ll see my name at the top of nearly all these tax ordinances,” Putz said. “And my hope really was that we would have a chance to talk to the public about what the heck we’re going to do to pay for these services in Sitka.”
To that end, the assembly passed a flurry of new tax hikes. Measures would double the tobacco tax, raise the sales tax cap from $1500 to $3000 and ask voters to increase the summer sales tax rate.
All three were passed on first reading, meaning they’ll come up for at least one more vote. And assembly members admitted they’re not entirely sure they support the measures. Aaron Swanson said he’s hoping the votes will open up a larger conversation.
“I’m going to vote in favor of passing this tonight just basically to get a feeling of what the community is thinking,” Swanson said. “[And] I think if you listen to Problem Corner tomorrow [on KIFW], you’re going to be able to hear what they’re thinking.”
The immediate catalyst for these proposals is the Sitka School District, which has asked for an additional million dollars to avoid major layoffs. Superintendent Mary Wegner framed the issue starkly: the district has cut everything it can, she said, including three teacher positions — the next cuts will hit classrooms directly.
“A million dollars is ten teaching positions. And that’s what I have left, are teaching positions,” Wegner said. “We’re there. We’re efficient. We’re down to the bones.”
Wegner was one of at least seven people who spoke in favor of the various increases. Heather Powell works with the Sitka Native Education Program and has three kids in the district. She said education must be a priority.
“It’s a tribal priority, it’s a community priority, it’s a family priority,” Powell said. “So what I tell you is be strong, and be brave in the decision that you folks are making, because it does affect each and every one of us.”
Sitka resident Matt Donohoe was the only one to speak against the increases. He argued that any sales tax hike would raise fuel costs and hit fishermen like himself hard.
“It’s not that I’m opposed to education or the schools,” Donohoe said. “But you’re putting this squarely on the back of the fishing fleet.”
In the end, the assembly voted 6-0 to double the tobacco tax. (Ben Miyasato was absent.) The city estimates that would raise about $250,000 a year. Money from the tobacco tax is earmarked exclusively for Sitka Community Hospital, but assembly members said they hoped it would free up funding for other purposes.
They then voted 6-0 to raise the sales tax cap. Right now, sales tax is only collected on the first $1500 dollars of any purchase. The proposal would raise that to $3000, bringing in an estimated $400,000 a year.
Mayor McConnell said she was on the Assembly when they last raised the cap, in 2013.
“I think there were predictions of horrible things to happen, and I don’t think they happened,” she said. She pointed out that the Juneau assembly just voted to raise their sales tax cap to $12,000.
Finally, the Assembly voted 5-1 to put a proposition on the October ballot to raise the summer sales tax to 7%, from 6% now. The ballpark estimate is that would raise more than $700,000 a year. That money would go into a fund dedicated to the School District.
Tristan Guevin was the lone ‘no’ vote on that one. He said the sales tax hits those who can least afford it.
“We’re looking at an increased tax on groceries, on fuel, and those things that families need to survive,” Guevin said.
But Deputy Mayor Matt Hunter argued that the sales tax – especially in the summer – brings in money from outside visitors.
“I would argue that perhaps what we should do is have a 12 or 13% sales tax in the summer, and zero through the winter,” Hunter said.
Several assembly members said they might be more comfortable raising property taxes. That proposal will likely come forward at a future meeting. And City Administrator Mark Gorman said staff have at least two other revenue ordinances in the works.
In other words, this can is no longer being kicked.
In other business, the Assembly voted to conduct the 2015 and 2016 municipal elections entirely by mail, while Sitka’s regular polling station, Harrigan Centennial Hall, is under construction.
Assembly members also awarded a contract to the Alaska Permanent Capital Company, to manage the city’s Permanent Fund; and overruled the planning commission to approve an accessory dwelling unit at 707 Lake Street, owned by former assembly member Phyllis Hackett.