Daily Sitka Sentinel

Tax Testimony Heard; Assembly Defers Vote

    With only five of the seven members present, the Assembly decided Tuesday night to postpone voting on proposed tax changes until all members are present.
    Those present agreed that it made more sense to take up the senior sales tax issue and the fish box tax distribution on March 27, and a controversial day care variance April 10, when the full body may be present.
    Since a number of people had come to speak on the senior exemption, Thor Christianson, who presided at the meeting, opened the floor for testimony, and several weighed in both for and against the proposal to add an income requirement to qualify for the sales tax exemption.
    In other action, Assembly member Mike Reif said under public comments at the end of the meeting that he erred at the March 6 meeting when he agreed with Mayor Cheryl Westover’s ruling to bar  Christianson from taking part in school funding discussions and decisions on grounds of “extreme bias.”
    Westover ruled that Christianson, whose wife is a teacher, had exhibited “extreme bias” on school funding in his comments at a Feb. 16 work session, and that therefore she was disqualifying him from participating in the school funding issues on the agenda. She said she could be overruled by a majority vote, and asked if any members wanted to overrule her decision. Only Mim McConnell and Phyllis Hackett voted in favor of overruling Westover’s decision.
    “I made a poor decision,” Reif said Tuesday night. He said all Assembly members have biases. “I do apologize to (Christianson), and the public to not allow him to represent his views.”
    Westover and Pete Esquiro were not present for Tuesday’s regular meeting.
    City Attorney Theresa Hillhouse, who had set the stage for Westover’s March 6 ruling by stating that Westover’s action was allowed under common law, announced that she has invited the city’s outside counsel, Michael Gatti, to advise the Assembly on conflict of interest. She said Gatti would be available via teleconference at the March 27 meeting, when school funding is expected to be on the agenda.
    Terry Blake agreed that getting Gatti’s opinion would help clarify the situation.
Bond Refinancing
    City Finance Director Jay Sweeney had some good news for the Assembly, reporting that the city has the chance to save about $250,000 in interest payments on the city’s general obligation school bonds. The Assembly voted 5-0 to participate in the refinancing project through the Alaska Municipal Bond Bank.
    The total savings is about $740,000 but the city’s share is only one third. The state will get the benefit of the rest of the savings. The refinancing means the bonds can be retired a year earlier, in 2022 instead of 2023, Sweeney said.
    “This is a straightforward yes vote for me,” Reif said.
    Senior Exemption
    Several residents spoke on the proposed changes to the senior sales tax exemption.
    The Assembly is considering raising the qualifying age from 65 to 67 and a half, requiring seniors to renew their exemption cards every year, and limiting benefits to those with income lower than two times the federal poverty level. The federal poverty level is $14,500 for a single person and $19,500 for a two-person household.
    Currently the exemption is for seniors who are retired. That would change if the ordinance passes, and all income-qualified seniors – retired or not – could receive the exemption card.
    The vote was 5-0 to postpone action on the issue until March 27, so the entire Assembly could weigh in.
    Christianson, who proposed the ordinance, said he was trying to find a better alternative to the ordinance that was on the table a few weeks ago that called for replacing the exemption with an annual $300 rebate to qualified seniors.
    Hackett said the aging population and changing demographics of Sitka were her main influences in agreeing to move forward with changing the senior tax exemption provisions.
    “We have a growing aging population and shrinking young people population,” she said. “Our future is in our young population. It’s unrealistic ... that the young people are able to afford us.”
    Hackett said the fairest way to apply an exemption would be to remove the tax on food, but she said the city is a long way off from being able to afford that.
    Responding to comments about cutting back on city expenses, she said the city cuts back every year and makes substantial cuts but those reductions are not properly publicized. She said the increases in city expenses are mostly due to mandates that require “cash and manpower.”
    Reif said he has been hearing from both sides on the issue, and wanted to hold off on deciding until he sees the 2012-13 budget.
    Nine residents spoke, expressing a number of different views. Some strongly urged retaining the present system and questioned whether there is actually a problem of cardholders making tax-free purchases for people who don’t qualify. Others made suggestions for spending cuts or other means of raising revenue.
    “Sitka is an expensive place to live,” said longtime resident Tom Pratt, in speaking against the ordinance. “The impact of a few cents here and there is a real deal-breaker.”
    Retired school principal Bob Schell questioned whether using someone’s adjusted gross income (as proposed in the tax revision) is a fair way to establish qualification for the exemption. He said high medical expenses that some people have would not be reflected in that figure.
    Kathy Kyle said the current exemption is giving a benefit to many people who don’t need it, and who are expecting “young people to carry the load.” She also spoke in favor of passing the ordinance to raise the sales tax cap.
    Ken Creamer spoke against changing the exemption. He said he shops locally and the 6 percent he saves on sales tax he spends locally. The end result would be harm to the local merchants.
    “To me we have a problem with revenue,” he said. He recommended passing a city budget where expenses meet revenues.
    Downtown merchant Shirley Robards expressed her disgust that the topic keeps coming up year after year, and said she has collected signatures from countless Sitkans who agree with her that the exemption should be left as is. She noted that the city of Juneau extends the sales tax exemption benefit to all Alaskan seniors.
    Assembly members encouraged those who spoke to continue to participate in the discussion.
On Hold
    Other items put on hold include the redistribution of the fish box tax, boat launch fees and the reconsideration of a conditional use permit the Assembly recently granted to Kids First Daycare.
    The fish box tax is a $10 per box tax assessed on all charter fishermen. Currently, 30 percent goes to the harbor fund, 30 percent to fisheries enhancement and 40 percent to general fund. The ordinance proposes putting 60 percent to harbors, 20 percent to enhancement and 20 percent to the general fund.
    Out of deference to the two sponsors who were not present – Westover and Pete Esquiro – the Assembly postponed action until March 27.
    The Assembly also deferred action on Conner and Valorie Nelson’s request for reconsideration of the conditional use permit given to Dawn Menendez to operate an eight-child daycare facility on First Street.
    The Menendez’ attorney, Corrie Bosman, asked the Assembly to make a decision at Tuesday’s meeting because the owners and parents who use the facility are anxious to have the matter settled.
    But the Assembly decided on a 4-0 vote to table the item until April 10 in order to give the Nelsons a fair airing of their request for reconsideration. Reif recused himself for conflict of interest reasons.
    At the last meeting, the Assembly granted the permit with a number of conditions to alleviate parking and traffic problems. But the Nelsons believe the Assembly erred in its decision.
    In an email to City Administrator Jim Dinley, Conner Nelson brought up the issue of the party wall agreement, which was made to “ensure the use of the property for residential use only.” He said he believes the home occupation operated by Dawn Menendez is a nonresidential use.
    The Nelsons, who do not live in the Menendez neighborhood, have said they object to the precedent of allowing commercial uses in residential zero lot line structures.
    The Assembly’s options are to reconsider its approval, or remand the issue back to the Sitka Planning Commission.
Other Business
    On other agenda items the Assembly:
    – approved the award of a design contract for the Baranof Street sewer and water replacement to DOWL AKM of Alaska, for $95,000.
    – approved a professional services contract for the Sea Walk Part 3 to Tetra Tech Alaska for $171,000. Part 3 is the section from the basketball court to the Sitka National Historical Park.
    – appointed Trish White to the Local Emergency Planning Commission, Mary Stephenson to the Tourism Commission; and Brian Bickar to the Sitka Police and Fire Commission.
    Bickar was asked to answer a few questions about why he wanted to be on the commission. He said he has experience that would benefit the commission. He said in his application that he would bring a sense of “well-rounded energy.” Reif said the Assembly had received some correspondence expressing concern with Bickar’s appointment. In the end, he was appointed on a 5-0 vote.
    Tom Pratt objected to the process that was used, and asked why other applicants were not called before Assembly in a similar manner.

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