The Sitka Assembly on Tuesday night (6-23-15) postponed action on a proposal to repeal the senior citizen sales tax exemption.
The measure would replace the exemption with a rebate program for low-income seniors.
Sitka’s sales tax is five percent in winter, six percent in summer. It funds more than a third of the city’s operating budget. And if you’re an Alaska resident who’s 65 or older, you don’t have to pay it: you are exempt.
That, however, may be about to change.
Assembly member Matt Hunter sponsored the proposal to repeal the senior sales tax exemption.
“I definitely, a hundred percent respect my elders, and I respect all the seniors who have come before and built this town,” Hunter said.
But, he said, it all comes down to one question: is this sustainable?
“If one looks up the projected demographics of our town, the age groups in just a decade or two, we’re rapidly approaching the point where greater than 30 percent of the residents are going to be over the age of 65 and qualifying for the exemption,” Hunter said. “That means that almost a third of the population will not be paying sales taxes.”
Hunter’s proposal — co-sponsored with assembly members Steven Eisenbeisz and Tristan Guevin — would replace the exemption with a rebate for low-income seniors. To receive the rebate, residents would have to sign an application declaring that they’re experiencing “financial hardship.” But nobody in city hall would check on income levels – the city would leave it to residents to decide whether or not they qualify.
The rebate would total up to $400 for an individual, or $541 for a couple. Hunter said those amounts are designed to cover the average sales tax paid on food, fuel and utilities — in other words, the necessities. The rebate could be refunded as a lump sum once a year, or as a monthly credit on utility bills. And unlike the current exemption, it would be limited to Sitka residents.
The proposal faced emotional opposition Tuesday night. While one member of the public spoke in favor, six people spoke against it.
“I’ve lived in Sitka since 1971, and worked until I was 70 so that I could have a little nest egg in case I had a serious illness,” Sitka resident Lois Rhodes told the assembly. “I was young once and know what it is to be poor, and hardly able to pay my bills. However, I scrimped and saved so that life would be comfortable in my older years. Now I feel that I am being punished for working so long and hard, and saving.”
“I think I paid my dues, I really, truly do,” said resident Shirley Robards. “I’m 80 years old and I’m still working. And, I don’t know, it’s just disgusting that you keep picking on the old people.”
“Our old timers would have said, are you ashamed?” said John Duncan, Sr.
Hunter said he knows that many seniors are struggling. But, he said, so are young families. He said he’s watched friends leave town because of the high cost of living, and exempting all seniors, regardless of income, means that younger residents have to shoulder the full cost of city services. That’s simply not fair, he said.
“I’m trying to find a way that we can get people who can afford to pay to pay their share, and still offer something for those who are truly struggling,” Hunter said. “Because it breaks my heart every time someone has to leave this town who wants to live here. I can’t imagine anything worse myself. This is home.”
The assembly was split on the issue. Member Aaron Swanson said he could not in good conscience raise taxes on seniors. But Tristan Guevin said he could support a version with a slightly higher rebate. And Michelle Putz suggested raising the age at which people become eligible for the rebate, to 70.
In the end, the assembly postponed the measure, asking the sponsors to revise it. It will be back on the agenda on July 14.
Assembly members also discussed the future of Sitka’s Convention and Visitors Bureau last night. Assembly members asked staff to explore the option of absorbing some of the bureau’s functions into city government.
You can find more coverage of the Sitka Assembly here.