Two tax proposals came to a stalemate at Tuesday night’s (04-10-18) meeting of the Sitka Assembly, receiving both support and resistance from the public. At the heart of the debate is a question of fairness: should citizens pay more to maintain current government and school services? And if so, which citizens? There was a near even split between the Assembly and community members.
Taxes dominated the conversation the Sitka Assembly meeting, as the body looks for ways to raise revenue to fund city government. (Photo courtesy of Pixaby)
The City of Sitka doesn’t have enough money to maintain government as is. They must either cut services or raise money. The Sitka School District, in particular, is facing a $2 million deficit and may have to eliminate teaching positions.
This didn’t sit well with several senior citizens. A group collected 380 signatures calling for the city to replace the senior sales tax exemption with a rebate program. Assembly members Kevin Knox and Bob Potrzuski co-sponsored a like-minded ordinance, which appeared before the Assembly Tuesday night on first reading.
Among the senior citizens in favor were Cindy Littman, Steve Lawrie, and Eric Jordan.
Cindy Littman: At one time, seniors were typically poorer than younger people, but that’s no longer the case.
Steve Lawrie: Those who need it can take. But I don’t need it.
Eric Jordan: Some of you know it’s been a pretty tough year for fishermen, so I’ve been claiming it. But I’m not going to claim it in the future. I’m going to rip it up.
Jordan then shred his senior sales tax exemption card to prove his point.
If passed, eliminating the tax exemption would be a $500,000 boon for the city. The ordinance (Ord 2018-14) also allows for qualifying low-income Sitkans over 65 to apply for an annual rebate check of $350. The notion of replacing the tax break with a rebate program has come up to the Assembly before – in 2012 and 2015.
As written, the ordinance says senior citizens may qualify for the rebate if they already earn assistance for a select list of social welfare programs, including state Medicaid or the Supplemental Nutrition Assistance Program (SNAP).
Several citizens felt the proposal was unfair to the elderly who paid their taxes as younger people and deserve a break. That included Shirley Robards, John Duncan, and Rachel Moreno.
Shirley Robards: We know many deserving seniors will no longer be eligible under the new rules and who knows how many more will refuse to be humiliated and threatened by the city by even applying.
John Duncan: I really believe that you folks should leave the old people alone.
Rachel Moreno: Elders don’t need to be put in a position where they go from a nice benefit to applying for a welfare program.
Co-sponsor Kevin Knox noted that the ordinance had to describe this as a social welfare program. Otherwise, the city would have to issue every qualifying person a 1099 form.
After 45 minutes of public testimony, the Assembly took up deliberations. Demographic trends were a big part of the conversation. Sitka’s population is aging, with 16% of the population over 65.
Those in favor of eliminating the tax exemption said it was in the best interest for Sitka’s young families. Mayor Matthew Hunter noted that the price of housing has quadrupled. There’s less children enrolled in the school district. Families are leaving town.
Assembly member Bob Potrzuski reasoned that financially-able seniors should contribute to the sales tax base to help out young Sitkans. “We’re shifting the burden from people who can afford to pay, who have spent a lifetime making money and who have saved money, and we’re shifting it to that younger group who are just starting out,” Potrzuski said.
Those against eliminating the tax exemption worried about the fate of the elderly, some of whom do not qualify for the proposed rebate.
Assembly member Richard Wein took aim about how the program would work, saying it eliminates protections for those senior citizens on the borderline. “The difference between young and old is that a 22 year old has a lifetime to earn money. But somebody who is 78 years old, that’s it. Whatever is in their bank account, that’s it,” Wein said.
Assembly member Aaron Bean said the money the city needs could be found in further cuts. He wants the city to consider eliminating temporary workers.
The vote – on first reading – was an even split. For the tax was Matthew Hunter, Bob Potrzuski, and Kevin Knox, while Richard Wein, Aaron Bean, and Ben Miyasato voting against. In his comments, Miyasato said he voted against eliminating the senior sales tax exemption in 2012 and would maintain his stance. Assembly member Steven Eisenbeisz was absent.
Since it takes a vote of four to kill an ordinance on first reading, this tax proposal will come up again for second reading on April 24th.
Also at an impasse was a tax proposal to raise lodging taxes – which combines bed and sales taxes – from 12% to 16%. Sponsored by Hunter and Knox, this proposal (Ord 2018-13) would net $1.2 million dollars in revenue for the general fund, where it could be diverted to say, the Sitka Performing Arts Center or the Harbor Fund.
Several members of the visitor industry cautioned the Assembly from taking such action, saying it could hurt tourism.
Sherry Aitken, the Director of Tourism with Visit Sitka, spoke to the ripples. At one point, she addressed Hunter directly. He is a teacher at Mt. Edgecumbe High School. “When people come to graduation at Mt. Edgecumbe Matt, all the parents have to stay some place and now they’re paying 16%. So, they’re not an other. They’re us. When they come over for Mudball (a softball tournament) from Juneau, are they going to still come if they have to pay 16% bed tax? Maybe. Maybe not,” Aitken said.
Aaron Bean spoke fervently against this tax proposal, saying it would drive visitors away. He said, “I would ask that you not make Sitka the most expensive place to visit.” A lodging tax of 16% would be the highest in Southeast.
Knox felt that people will leave Sitka – residents and visitors alike – if infrastructure deteriorates. He spoke specifically about the harbors. “Everyone in this community, everybody, whether you have a boat or not, benefits from our harbors system. We all need to pitch into it somehow. Not just the users. This is one of those ways we can put a little bit towards it.
Bob Potrzuski then made a motion, amending the ordinance to raise the lodging tax to 14%. The motion was voted down. When it came time for a final vote on the ordinance as written, it was tied 3 for 3, with the same Assembly members voting the same way as the senior sales tax proposal. This too will come up again for second and final reading at their April 24th meeting.
In other business, the Assembly:
–Approved, on first reading, $75,000 of General Fund working capital money for a landslide study around Keet Gooshi Heen Elementary and Sitka High School: Motion and memo Ord 2018-09
–Heard a detailed presentation on the final draft of the Sitka Comprehensive Plan (Final Sitka Comprehensive Plan 2030)
–Heard public testimony from both citizens and city administrator Keith Brady about the removal of an art show on the 2nd floor of city hall.
