Rather than pursue collecting more sales tax on big jobs at the Marine Service Center, the assembly appears more interested in raising user rates at the facility in the future if additional funds are needed to maintain and replace the equipment.

The assembly last month shot down a proposed change in borough code to impose Wrangell’s 7% sales tax on the first $50,000 of a Marine Service Center job, a much higher threshold than the $5,000 taxable limit on all other purchases of goods and services in town.

At an assembly work session on June 10 to discuss the value of the marine facility to the community, Assembly Member David Powell suggested investigating the benefits of future rate hikes rather than increasing the sales tax cap.

Mayor Patty Gilbert indicated she believes raising rates is “probably a better course of action to follow.”

The problem, borough officials have explained, is that the service center does not collect enough in user fees to build up a healthy reserve fund for when its expensive equipment, such as boat haul-out and travel-lift, need replacement.

To start working toward that goal, the assembly in April raised rates at the Marine Service Center.

Effective July 1, a new, variable rate structure will charge higher fees April 1 through July 31, with lower rates the rest of the year, intended to give year-round residents a break.

The boatlift and haul-out rates for summer work will increase by about 28%, with a 7% rate hike the rest of the year.

The rates for storage will increase too, with higher rates for short-term storage April through July.

Borough Manager Mason Villarma presented a profit-and-loss analysis spanning the past six fiscal years, noting that harbor revenues “are kind of funding the service center after expenses.” A key concern, he added, is maximizing the center’s value without hurting local residents.

“It’s a valuable part of our economy,” Villarma said at the June 10 assembly meeting.

He noted that “75% of every dollar that is spent out there is exempt” from sales taxes because the invoice exceeds the cap on taxable purchases.

The proposed $50,000 cap on taxable work at the Marine Service Center, which the assembly rejected May 27, would have generated a $3,500 sales tax bill on a $50,000 repair or rebuild job. Assembly members voiced concern that the higher tax bill, plus fees for hauling boats out of the water and storage during repairs, could prompt boat owners to seek services elsewhere.

The borough invested $40 million in state and federal grant funds to develop the Marine Service Center more than 20 years ago. Villarma reminded the assembly that the borough needs to collect sufficient user fees and taxes to afford replacing expensive equipment as it ages, such as the boat haul-out and travel-lift.

Work at the center typically averages between $25,000 and $50,000 per job. Raising the taxable limit on work at the Marine Service Center could have generated an estimated $150,000 to $200,000 annually in additional sales tax revenues.

After removing the marine facility tax provision from the ordinance on May 27, the assembly approved an increase in the cap on all taxable purchases, raising it to $5,000 from $3,500.