KODIAK — The Kodiak Island Borough Assembly ironed out the details Thursday of an ordinance placing a borough-wide sales tax on the ballot for October’s municipal election.
The ordinance comes up for a public hearing next week before review by the assembly for approval.
The current wording of the ballot proposition would ask voters if the borough should levy a sales tax of up to 2 percent, seasonally, with the revenue going to education debt retirement for the new high school.
The sales tax would run from April to September, the two quarters that had the highest amount of sales tax collected in 2010, according to City of Kodiak numbers.
The borough’s ability to levy the sales tax, by the ordinance, would sunset in 2034 unless voters approve the sales tax again. The date is figured by the final repayment of bonds for the new high school.
Assembly discussion Thursday focused on whether to place 1 percent or 2 percent borough sales tax authority on the ballot.
“I would like to see it up to 2 percent, and then we have some maneuvering room,” assembly member Louise Stutes said.
However, even a seasonal sales tax of up to 2 percent would not fully cover debt service payments for the high school construction project and the borough would need to find another revenue source to make up the difference.
Borough finance director Karl Short calculated that each percent of sales tax would raise $900,000 for the borough, but the borough would also encounter costs of either contracting with the city of Kodiak or adding staff and software to facilitate collection.
According to state law, if the borough institutes a sales tax, it then is responsible for collecting the sales taxes of all of the cities within the borough as well as the borough’s tax. However, the city of Kodiak and the Kodiak Island Borough could sign an agreement that would have the city collect its own sales tax, according to a memo from Short.
The cost to start a sales tax program could reach $300,000, according to Short’s memo. Staffing costs and maintenance would then add an annual cost of about $200,000.
The assembly has time to refine the sales tax ordinance. The deadline for inclusion on the municipal ballot is Aug. 12.
Mirror writer Wes Hanna can be reached via email at firstname.lastname@example.org.