KODIAK — Voters in the Kodiak Island Borough will decide whether to approve a year-round sales tax up to 1 percent at the municipal election Oct. 4 after the assembly narrowly approved an ordinance placing the question on the ballot Thursday.
With equal numbers of assembly members on each side of the issue, Borough Mayor Jerome Selby broke the tie to put the sales tax on the ballot.
“When it comes to putting something before the public,” Selby said, “I will never stand in the way of letting the public get involved in borough business.”
The borough assembly had been considering a seasonal sales tax of up to 2 percent coming into the meeting. However, the assembly took into account public comment from small business owners in Kodiak on the expense of customizing finance software to deal with the seasonal sales tax and amended the ballot measure.
Assembly member Judy Fulp, who sank a sales tax measure last year when she found it too broad, voted to approve the measure this year, in part because it would only go toward the bonded debt for the high school authorized by the voters two years ago.
Assembly members closely questioned borough finance director Karl Short and borough manager Rick Gifford to be sure the revenue generated from the sales tax would only be spent on the debt for the high school reconstruction and renovation project.
“I think by the fact that we used the language in the bond, and that we refer to that bond election … and that we have the sunset date in there, I think we’re covered,” Gifford said.
The sales tax measure, if approved, would expire with the final payment on the $76 million worth of bonds in 2035.
Joining Fulp in favor of placing the sales tax before voters were assembly members Sue Jeffrey and Dave Kaplan.
“This is not shoving it down the voter’s throat,” Jeffrey said. “It is simply saying to voters, what do you think. You can vote for or against it.”
Jeffrey said she had heard the concerns of retailers, but was also considering the concerns of property owners who would bear the cost of paying for the high school renovation project.
Kaplan said he had heard the plight of the small business owners as well, but the borough had a long way to go to be able to pay the debt on the bonds
“We’re going to have to start somewhere, somehow, to generate revenue,” Kaplan said. “I feel comfortable giving the voters the choice of where to start.”
Voting against placing the measure on the ballot were assembly members Chris Lynch, Jerrol Friend and Louise Stutes.
Instead of putting another tax on local businesses, Stutes said, “We should be trying to support our small businesses and make sure they are healthy and viable.”
Stutes said she would prefer cutting back the high school project and continuing to look at the Kodiak Island Borough budget for savings instead of raising taxes.
“I just think it’s horrific that every time we can’t balance our budget, we turn around and say, well, let’s go to the people of this community and tell them to get their check books out again,” Stutes said.
Lynch, a downtown small business owner, has been against the concept of an additional borough sales tax from the beginning, saying it would drive businesses, like hers, to close there doors.
“This would put me over the edge,” Lynch said.
Businesses inside the city of Kodiak would pay the borough sales tax in addition to the city sales tax of 6 percent.
“Has anyone noticed downtown or midtown?” Lynch asked. “Shops are empty. Buildings are empty. They are going to get more empty if people can’t afford to have a business.
“Giving people one more reason to shop on the Internet — I just don’t think we can afford to do that to our community,” Lynch said.
Local small business owners attended the public hearing on the sales tax ordinance to express their opposition for several reasons.
“I am opposed to a borough sales tax because I believe it will be detrimental to small businesses like mine,” said Janet Wente, owner of Northern Exposure Gallery.
“More and more people shop online,” Wente said, and a higher sales tax would increase that trend.
She also opposed the sales tax because of the cost to implement and run the tax collection and because the sales tax wouldn’t generate all of the revenue to pay down the bonds each year.
However, while all of the comments from small business owners were adamantly opposed to the sales tax, not many showed up to the public hearing.
“Quite frankly, I’m disappointed to see such a small turnout from the small business owners,” Brandi Norkus said. “An increase in sales tax would be probably more in a bad economy than a small business in a small town can stand.”
Mirror writer Wes Hanna can be reached via email at email@example.com.