Daily Sitka Sentinel

Assembly Puts Marijuana Tax On Way to Voters

Members of the Sitka Unified Command, from left, Dave Miller, Craig Warren, John Leach, Thor Christianson, Melissa Henshaw, Amy Ainslie, Steven Eisenbeisz, Sara Peterson, Jessica Ieremia, Melissa Haley, Grant Turner, Lisa Gassman, Anne Davis and Travis Miller, were given recognition for their work during the COVID-19 pandemic, at Tuesday night's Assembly meeting in Harrigan Centennial Hall. (Sentinel photo)

By SHANNON HAUGLAND

Sentinel Staff Writer

By a 6-1 vote, the Assembly on Tuesday moved forward on a ballot question for a marijuana sales tax dedicated to school activities and associated travel.

The ballot question ordinance will be up for final reading on May 24, but Assembly members said more work may be needed in the language of the ordinance to ensure the funds go to their intended purpose. If the Assembly approves major revisions to the ordinance at its next meeting, it would have to be held over for another two weeks for a third reading and final approval.

Rebecca Himschoot, Kevin Mosher and Kevin Knox co-sponsored the ordinance. If it passes on final reading the question of the tax would be put on the October 4 municipal election ballot. 

The proposed question calls for the exemption of marijuana sales from the city’s sales tax, and instead applying a “consumer’s sales tax on marijuana and marijuana products.”

The tax would start at 6 percent January 1, 2023, and go to 8 percent in the second and 10 percent in the third year and beyond.

Proceeds are estimated at $210,000 in the first year, $280,000 the second and $350,000 the third, which would go to a fund dedicated to school activities and travel. Sponsors said they want to help make activities more affordable, remove barriers to participation, and reduce the fundraising burden on parents, the business community and coaches.

Proceeds from the new tax would more than cover the $195,000 annual revenue that would be lost if the sales tax was no longer collected on marijuana sales.

Sitka High School activities director Rich Krupa and coach Jeremy Strong said a dedicated funding source for activities would ease the financial burden of activities fees.

“If there’s a way to lessen the burden on families I’m all for it,” Strong said. “Put it up for a vote and see how the community feels.”

The last time a special tax on marijuana was proposed it failed on a split vote at the Assembly table. Mosher proposed the graduated tax rate that is in this version of the ordinance.

Some concerns were raised about guaranteeing that the tax will be used for its intended purpose.

The ordinance says that the funds would “only be used to assist with the payment of extracurricular student activities and associated travel costs...” but does not say how and when funds would be disbursed.

At the end of the discussion, Assembly member Crystal Duncan voted in favor of passing the ordinance. She said she saw the content outlined in the sponsors’ memo as an opportunity to have a larger conversation around systemic inequity. When contacted today, she added, “Inequity must first be identified as a problem by those in the position to enact change, and then addressed. Being that this funding would simply be a pass through to the district, it’s difficult to attach goals, intention and follow through, to the money.”

Mayor Steven Eisenbeisz was in favor of the concept, but voted no on first reading, saying he wanted language saying the funds would be “supplemental” to the current student activities fund, not replacing already budgeted money.

The name of the fund is changed under the ordinance from Student Activities Dedicated Travel Fund, to the Student Activities Fund.

School district officials said they did not have figures immediately available for the cost of extracurricular activities, including participation fees and travel.

Himschoot said today that before the next Assembly meeting she will meet with Mosher and Knox on how to address Eisenbeisz’s and Duncan’s concerns.

“We’re grateful for their input – it was helpful,” she said. “We want to create the best ordinance that we can and sometimes that takes more than two readings.”

City Finance Director Melissa Haley clarified today that the Assembly has the ability and authority to dedicate tax funds to a specific purpose, such as school activities and travel.

“For example, the Assembly this year dedicated $122,000 for swimming pool operations from the general fund,” she said today. If the marijuana tax is approved by voters this fall, funds could be available for their designated uses at the start of fiscal year 2024, she said. 

Michelle Cleaver, owner of the marijuana retail business Weed Dudes, objected to the tax proposal because it would disproportionately affect her business, which also pays state and federal taxes.

“We’re losing (businesses) because they can’t afford to pay taxes,” she said. Cleaver called the eventual 10 percent tax unfair since her sales will be taxed at a rate much higher than the tax on other products. She said she and other marijuana merchants had not been part of the conversation until Friday. Cleaver added today that the city Marijuana Advisory Committee in 2015 recommended a 3 percent additional local tax, which she thought was more fair.

“Give this industry a chance to grow, but they can’t kill the goose before we get there,” she said today.

House Bill 149

The Assembly passed a resolution 7-0 in support of House Bill 149, which would set up a dedicated child care fund in Alaska and allowing for sectoral collective bargaining for childcare workers.

The bill passed in the House but legislative observers say it “is not highly likely” to pass the Senate this year, which means it will die when this session of the Legislature adjourns.

But Assembly members agreed it was important to shine a light on the problem of the cost and availability of daycare, and providing living wages and benefits for providers.

“It’s a piece of a big problem we have in our community, Southeast and the country,” said Knox, who co-sponsored the resolution with Himschoot. “It’s a growing crisis and we’re looking to shine some light on it.”

The bill calls for allowing for collective bargaining for childcare workers and providers, who would bargain with the state on issues such as wages, benefits and training.

Kari Sagel, a member of the Early Childcare Coalition, said the goal of “affordable and available childcare” was set before the pandemic. She said the problem needs the help of local government, state government and large employers to solve it.

Eisenbeisz agreed and said the current situation is “unsustainable.”

“A lot of people are not working because they can’t (find and afford) daycare,” he said. “We’re sending a message the state needs to start looking into it.”

Other Business

In other business, the Assembly approved resolutions for grant applications for a haulout and seawall repairs; reappointed Scott Saline to the Sitka Historic Preservation Commission; reappointed Wendy Alderson to the Sitka Planning Commission; approved funding for Cross Trail repairs; and recognized members of the public for their contributions to the pandemic response.

More details on other Assembly business will be in Thursday’s Sentinel.