By SHANNON HAUGLAND
Sentinel Staff Writer
The Assembly will face a packed agenda at Tuesday night’s regular meeting, including proposals for two tax questions for the city election ballot.
The first proposes a 3-cent per gallon excise tax on motor fuel for boats and vehicles, with proceeds supporting city harbors and roads, and other infrastructure.
The second proposes a “consumer’s sales tax” of 5 percent on marijuana, with proceeds going to the school district student activities fund.
Kevin Knox and Rebecca Himschoot co-sponsored the two proposed ordinances. If approved by the Assembly the tax questions will appear on the October 5 city election ballot.
Tuesday’s regular Assembly meeting starts at 6 p.m. at Harrigan Centennial Hall and is open to the public. Remote participation is available.
“Nobody wants to raise taxes, of course,” Knox told the Sentinel. “But we have fiscal needs we’ve been putting off, or fiscal challenges we haven’t been able to solve. That’s why we’ve brought these two forward. We have infrastructure funding needs and school funding needs and we need to come to the table with solutions.”
“One does not run for Assembly intending to raise taxes,” agreed Himschoot. “That’s kind of the last thing we want to do. We’re recognizing the state revenue streams are dwindling. ... The support we had for infrastructure and other needs is going away or has been greatly reduced. The good news is we’re targeting taxes for some of the needs in the community.”
Himschoot said it’s a question for the public to decide, not the Assembly.
“We’re asking the community to come together around some needs the community has,” she said. “People have a choice. That was important to me in co-sponsoring the ordinances.”
Fuel Tax
The ballot question citizens would be asked on the fuel tax reads:
“Shall the Sitka General Code be amended effective January 1, 2022, by adopting a three cents per gallon excise tax on motor fuels, including motor vehicle and marine, sold, transferred or used in the municipality, and place the tax revenues in dedicated municipal funds for the maintenance, repair, replacement, and/or construction of related municipal infrastructure? Yes or No.”
The ordinance is 17 pages long and can be read on the city webpage at cityofsitka.com.
Knox said the original idea for the question came through the Port and Harbors Commission.
“This has been years in the making,” said Knox, who serves as Assembly liaison to the panel. “They wanted to diversify the income into the harbor fund. The idea was to bring forward a marine fuel tax that would be dedicated to the harbor fund. We (Rebecca and I) took the idea and broadened it.”
A similar fuel tax for vehicles helps fund roads in Anchorage, Knox said.
“Its intent is to direct revenue into specific infrastructure,” he said.
Funds collected from the vehicle fuel tax will go to the roads; and marine fuel tax revenues will go to the harbors. The tax is on top of the city, state and federal tax on fuel, Knox said.
Himschoot, who owns an electric vehicle, said that although the electric vehicle users will not be contributing to the road infrastructure through the tax, using electric vehicles helps the electric fund which reduces rates for everyone – albeit in a small way.
“We have room for more EVs in Sitka,” she said.
Knox said Sitka is seeing roads deteriorate, as well as “what’s underneath,” at a rapid rate. That includes water and sewer lines. Without help, Sitka will continue to see lines break, which will require more costly repairs.
“We’re way behind in everything under the ground,” he said. “We have so much more than what is realized.”
Himschoot added that with a new source of revenue Sitka will be able to upgrade roads and facilities in line with ADA standards.
She said the boat fuel tax collected will mean more equitable sharing of the burden of keeping up the harbors, instead of relying on ever-increasing moorage rate charges.
Marijuana Tax
The ballot proposition related to the marijuana sales tax says:
“Shall the Sitka General Code be amended, effective January 1, 2022, by adopting a five percent sales tax on marijuana and marijuana products sold in the municipality, in addition to the existing sales tax on retail sales, and place the tax revenues in a dedicated municipal fund for the Sitka School District for extracurricular student activities and associated travel costs? Yes or No.”
Many school and school-related activities, including sports, require fundraising and participation fees, while travel costs related to the failing ferry system increase.
Knox said he worked with former Mayor Matt Hunter and former Assembly member Tristan Guevin on a city marijuana tax in the past.
The city receives some revenues through the state from fees paid for marijuana licenses and applications, as well as the regular city 5 to 6 percent sales tax.
A 5 percent additional tax would mean sales tax on marijuana products would go to 10 percent in the winter months and 11 percent in the summer months.
The sponsors said the new tax would generate about $200,000 for the Sitka School District student activities fund.
Himschoot pointed out that Sitka voters approved a similar tax on tobacco, which raises some $800,000 a year. The revenues were dedicated to the Sitka Community Hospital dedicated fund, which currently is being used to offset liabilities associated with the closure of the hospital.
Knox said marijuana tax would help kids participate in activities, and defray expenses for families. Himschoot added that it would ease the burden on the business community, which contributes to many activities.
Both Knox and Himschoot acknowledge that these proposals are not going to solve all of the city’s financial problems, but could help with a few.
“It doesn’t mean they don’t have their faults,” Knox said of the ordinances. “There truly isn’t any solution that’s going to be a golden goose.”
The sponsors had no estimate on how much would be raised by the motor fuel tax.
Other Business
Other items on Tuesday’s meeting agenda include appointments to committees, an update on the garbage disposal contract, appropriations questions, and a lease of city land at 4951 Halibut Point Road to Shee Atika Inc. The urban Native corporation is working with Adventure Sitka and other community partners to develop a new visitor attraction.
There are also resolutions to apply for a federal RAISE grant to build the haulout at the Gary Paxton Industrial Park and reconstruct the port wall and crane at the marine services center. Another resolution is for a federal Department of Transportation grant to rebuild the seawall and purchase a crane at the marine services center.
The city clerk asks that anyone wishing to participate remotely contact city staff at 747-1826 by 4 p.m. Tuesday. Remote viewing is available through cityofsitka.com and on the YouTube channel.
