Daily Sitka Sentinel

Assembly Votes for Sales Tax Cap Hike

    The Assembly on Wednesday approved on introduction increasing the sales tax cap to $1,500, starting on July 1.
    City officials don’t know how much additional revenue would be captured as a result of the higher cap, but say there is still a ways to go to balance the budget and set aside funds for infrastructure.
    The meeting Wednesday was a carryover of the regular Tuesday meeting, which ran from 5 to 10:30 p.m. The meeting Wednesday ran 6 to 9:30 p.m.
    The Assembly meets again 6 p.m. today in the school district office board room at Keet Gooshi Heen Elementary to discuss school and Assembly budget issues.
    The motion to approve the increased cap passed on a 5-1 vote, with Pete Esquiro, Mike Reif, Mim McConnell, Thor Christianson and Mayor Cheryl Westover voting in favor. Terry Blake voted against.
    At least two more readings will be required for the ordinance to pass, since the Assembly made substantial changes to the ordinance as presented.
    The ordinance goes into effect on July 1 of this year. The Assembly approved an amendment that would grandfather in sales at the $1,000 cap if the sales were made before April 1, or the implementation date of the ordinance, whichever is later.
    A motion to set Sept. 1 as the effective date failed on a 3-3 vote, with Blake, Westover and Esquiro voting in favor, and McConnell, Christianson and Reif voting against.
    Those speaking in favor of the amendment said the later date would be easier and more fair to businesses which had made decisions and sales based on the $1,000 cap.
    “I feel very strongly about Sept. 1,” Blake said. “It would save a lot of confusion.”
    Those arguing against Sept. 1 as the effective date said that the city would lose the benefit of the $1,500 cap during the busy summer of fuel sales and purchases of higher-priced items. They said it would be possible to accommodate those who had already made sales based on the $1,000 cap by grandfathering them in.
    “There’s a huge difference between the two (dates),” McConnell said. “We need to think about why we’re doing this. We’re doing this because we need the money.”
    The effective date will be July 1, but an amendment passed that will grandfather in at the $1,000 cap any agreement for a sale reached prior to April 1, or the date the ordinance passes, whichever is later. The agreement must conclude by Oct. 1, 2012. That amendment passed 4-2 with Westover and Blake opposed.
    The Assembly also rejected a proposed change that would have disallowed the practice of “bundling” charter sales to family members as a single sale. But Assembly members voted to keep the old policy in place and consider a sale to a family as a single sale.
    Another proposal, by McConnell, was rejected that would have increased the cap by $100 a year for the next five years. The proposal provoked a strong reaction from Theresa Weiser, president of the Sitka Charter Boat Operators Association.
    “You’ve got to be kidding, Mim,” Weiser said. She said she was already “a long way from comfortable” with what she considers to be subjective language in the ordinance. Weiser suggested elimination of the fish box tax, if McConnell’s ordinance were to pass, as a compromise.
    “We’re struggling,” Weiser said. “It’s not good times with the economy. To have this hanging over our heads ...”
    Seth Bone, another charter operator, also testified against the amendment and said he believed the 50 percent increase in the cap was a good compromise.
    The vote was 0-6 on McConnell’s amendment.
    Also testifying from the public was Jennifer Robinson, Chamber of Commerce director, who said the city should be working on a long-term comprehensive plan for the budget instead of short-term changes.
    The Assembly also postponed action on a number of proposed administrative changes after it was clear that more work was needed before moving forward.
Fish Box Tax
    In other business, the Assembly passed 4-1 on first reading an ordinance to redistribute the fish box tax proceeds to give more to the harbors and less for fisheries enhancement and the general fund.
    Reif, a charter operator, recused himself, saying he had a bias against the tax and wanted to be fair to the public.
    The new distribution is 60 percent to the harbor department, 20 percent to the general fund and 20 percent for fisheries enhancement. The previous distribution, after the last time the Assembly changed it in 2009, gave 30 percent to the harbors, 40 percent to the general fund and 30 percent to enhancement programs.
    The fish box tax, which went into effect in 2007, assesses a $10 tax on every box of fish taken by charter fishermen.
    The original proposal, co-sponsored by Westover and Esquiro, was to eliminate funding for enhancement. Several spoke against that idea, including board members from the Sitka Sound Science Center which receives funding from that source.
    An amendment passed to change the distribution to 60-20-20 on a 5-0 vote, and the ordinance was approved 4-1, with Christianson opposed. He said the fish tax was approved by voters and he was hesitant to change voters’ intent. Christianson said it made sense that part of the proceeds benefit the people paying for the tax.
    “That they’re contributing to enhancement is a good selling point,” Christianson said.
    Westover said her goal was to help cover some of the extra city costs incurred for dumping fish waste from the harbor cleaning stations, but said she was amenable to the proposed changes to the distribution formula. She said everyone uses the harbor system, so the increases to that department are warranted.
    Charter operators pointed out that they do not use the cleaning stations, which are only for unguided sport anglers.
    Speaking from the public, Nancy LeClerc Davidson, Sitka Sound Science Center board member, spoke against the changes to eliminate funding for enhancement. She said small fisheries enhancement programs, such as the one at SSSC, are not eligible for funding from the salmon enhancement tax; the enhancement allocation provides an opportunity for charter fishermen to contribute to enhancement programs; and that both charter fishermen and enhancement programs benefit from the tax as approved originally by voters.
    Esquiro, former manager of Northern Southeast Regional Aquaculture Association, asked SSSC board member Scott Harris a number of questions, including whether the center’s hatchery was working toward self-sustainability to the point that the enhancement funds would not be needed. Last year, the hatchery received $33,000 from the fish box source.
    Harris said that the SSSC hatchery has a plan for long-term sustainability, knowing the fish box funds may not be available indefinitely. He said the organization has been able to leverage the fish box proceeds into more funding from other organizations outside Sitka. Harris said receiving the fish box tax proceeds is a valuable show of city support for SSSC’s hatchery.
    A few Assembly members stated their preference for eliminating the fish box tax entirely. Weiser said that would be her organization’s “first choice.” She spoke in favor of keeping funds for enhancement but said in general the tax was “not very visitor friendly.”
    “We would like to see it be eliminated, and show visitors you’re trying to be more visitor-friendly,” she said. Weiser said Sitka is the only community in the state with such a tax.

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