Daily Sitka Sentinel

Propositions Readied For Vote on Taxes

By SHANNON HAUGLAND
Sentinel Staff Writer
    Tax proposals, ballot questions and leases are among the items on tonight’s packed Assembly agenda.
    The regular meeting starts at 6 p.m. in Centennial Hall preceded by a 5 p.m. work session on the local hazard mitigation plan.
    Assembly members Kevin Knox and Bob Potrzuski co-sponsored an ordinance to exempt groceries and residential utilities from sales tax, and another ordinance calling for a ballot question to increase the property tax by 2 mills.
    The sales tax exemption would go into effect Jan. 1, 2019, but only if the proposed 2 mill property tax is approved by the voters in the Oct. 2 city election. For the tax increase to be placed on the ballot the Assembly must pass the authorizing ordinance, which will be on the agenda tonight on first reading.
    Knox said today the idea behind the property tax increase proposal is to address the current inequality in Sitka’s tax structure.
    “The bottom line is we’re trying to bring equity to the tax structure in Sitka,” he said.
    Currently, the largest source of income for the city general fund is sales tax, which affects lower-income residents disproportionately, he said.
    A property tax increase assumes those with property and higher-value property can afford to pay more than those without property or lower-value property, Knox said.
    Sitka’s property tax is capped now at the current 6 mills, which means property owners pay six-tenths of a percent of the value of their property. An increase to 8 mills would require an amendment to the Home Rule Charter. Each mill brings in about $1.1 million in revenue, the assessor’s office said today.
    The ballot question asks:
    “Shall the Home Rule Charter of the City and Borough of Sitka be amended to increase the property tax levy limit from 6 mills to 8 mills? Yes or No.”
    Two other connected ordinances up for consideration relate to Sitka’s bed tax. Both are co-sponsored by Knox and Mayor Matt Hunter.
    The first would eliminate a sales tax on lodging, but it would take effect only if voters approve a stand-alone lodging tax of 14 percent.
    The net increase in revenue is projected to be about $200,000, and all revenues generated from the source would be divided between the general fund and the Visitor Enhancement Fund. Currently, hotel, bed and breakfast, and short-term rental customers pay both the city’s 6 percent bed tax and the 5 or 6 percent sales tax.
    “In part it streamlines things a little bit; a lot of other municipalities do this,” Knox said. “The other piece of it is if we make this change it gives us the ability to look at marijuana or an alcohol tax that we currently can’t (under state law).”
    Knox said the tax change would increase revenues to the Visitor Enhancement Fund to support marketing efforts for conventions and the shoulder season.
    “$200,000 a year – that’s a significant amount to put toward additional visitor enhancement services,” he said.
    The ballot question asks:
    “Shall the Sitka General Code be amended to increase the tax on transient lodging rent, previously known as ‘bed tax’, from 6 percent to 14 percent? Yes or No.”
    Hunter said additional revenues collected would help out the general fund.
    “The beauty of it is, it’s a tax paid by the visitors; it’s money coming from outside,” he said.
    The Assembly also is scheduled to reconsider a vote taken at a previous meeting that rejected the Gary Paxton Industrial Park’s recommendation to lease a tract of park land to Trident Seafoods; and to take up a lease extension with Seafood Producers Cooperative at the Sitka Marine Services Center.
    Also on the agenda is a discussion or decision on the contract with the Sitka Chamber of Commerce to continue providing visitor services for the city.