The Skagway Assembly put the brakes on a year-round sales tax increase – for now. But not before hearing a few concerns about the possible measure. The possible tax hike was motivated by the recreation center expansion, which is estimated to cost $17 million.
On the agenda was the introduction and first reading of an ordinance that would push forward an amendment to the sales tax code, establishing a one percent year-round sales tax increase. If passed, the question would go to Skagway voters on the October ballot.
Right now sales tax in Skagway is five percent from April-September. That goes down to three percent from October-March.
If passed, the increase would raise taxes by one percent for the entire year. That means it would be six percent in the spring and summer months, and four percent for the fall and winter.
Revenue from the increase would go toward the rec center expansion and aquatic wellness center.
Lacey Chandonnet owns Glacial Smoothies and Espresso. She said she’s worried about the impact a tax increase could have on small businesses.
“It may seem like an extremely small amount to some people – 50 bucks. But to some people it can be literally in the thousands,” said Chandonnet. “You’re looking at some small business owners that are open year-round that pay rent already – employee housing, services, that’s a large amount.”
Tim Bourcy suggested tabling the ordinance for now and reviewing municipal expenses.
“Periodically I think we need to go through departments and budgets and really take a hard look at the way money has been spent,” said Bourcy. “A lot of the departments have been getting new equipment. Sometimes we have to tighten the belt if we’re trying to achieve other goals.”
A concern was also raised about potential state tax increases. Here’s Assemblyman Orion Hanson.
“I think we need to have some prudence with what we’re thinking about going in the future with potential sales taxes until we find out what really comes down at the state,” said Hanson. “Because we pass a 1 percent sales tax, the state passes a 1, one and a half percent sales tax, and then we’re looking at seven and a half percent?”
Hanson said right now, he doesn’t think the measure would stand a chance at the polls.
“If we voted today on first reading, and we sent this to the voters I think it would fail,” said Hanson. “I think the political climate right now – I don’t think the voters would pass it.”
Assemblyman Jay Burnham disagreed.
“I believe the voters would vote yes on this,” said Burnham. “I think it would be because they want a pool, just like me. And they want a rec center expanded, just like me. And this is a way to pay for it.”
Still, he suggested putting the ordinance off, until the full assembly was present to make a decision. Assemblyman Spencer Morgan was absent. He also wants to have the ordinance reviewed by the borough attorney.
The assembly voted unanimously to take the ordinance off of the agenda.