Tax proposal divides town

A proposed 1.5 percent sales tax cut in the City and Borough of Wrangell has split the community ahead of an Oct. 1 vote.

The borough administration sent out an informational flyer this week outlining the details of cuts approved with the budget May 28, sparking at least one accusation of advocacy against the cuts. Business owners and citizens have taken out an advertisement against the reduction in the Sentinel. Assembly members and citizens have spilled ink for and against the proposal in letters to the editor.

The proposal’s author and advocates say lowering sales tax from a state-highest 7 percent to 5.5 percent would stimulate the borough’s economy. Opponents say budget cuts resulting from the proposal would affect services that improve the quality of life for borough residents.

Assembly member and proposal sponsor Ernie Christian, accumulated 113 signatures from citizens and a 6-0 vote from the Borough assembly to put the tax proposal on the ballot, according to Borough Clerk Kim Lane.

Christian says he’s trying to help consumers and taxpayers.

“I think, if you put more money in a person’s pocket, that’s a good thing,” he said. “If we can lower the cost of living in Wrangell, it helps everybody out.”

Opponents, like John Waddington, say the current tax rate pays for valuable services.

“These are not essential,” he said. “These services are for our quality of life.”

The proposal’s passage would trigger a series of cuts to go into effect Nov. 1, according to the budget and informational flyer sent out this week. The largest cut would reduce the borough’s contribution to the school system by $196,948 to the minimum contribution allowable by state law. Almost $100,000 would be cut from the borough’s general fund. Other sizable cuts would eliminate funding for a lobbyist in Washington, D.C., a contribution to the Chamber of Commerce, funds for community promotion and the senior center.

Some city officials and officials of community groups who would be forced to accept the rate cuts were mum on which specific services might be cut if the proposal passed.

“We’re waiting to see what will happen before we have to make any cuts,” said School Superintendent Rich Rhodes, echoing a sentiment common among many administrators facing cuts.

School board president Susan Eagle also declined to go into detail about potential cuts. However, the cuts could mean additional difficulties for a school system already beset by declining enrollment, which could impact federal and state funding.

“We really hope they don’t do it,” she said.

Other entities facing cuts were more direct, but also withheld details about specific cuts. The senior center, operated by Juneau-based Catholic Community Services, would lose roughly 7 percent of its budget, according to Doug Bridges, the group’s regional coordinator.

“We would have to look at either cutting a meal or transportation,” he said. “We haven’t had to face that reality yet.”

George Joseph, the manager of the center, hesitated to say whether the cuts were a good or bad thing.

“We’re praying that it’s not gonna happen,” she said.

Beyond the fact of the cuts themselves, supporters and opponents of the rate cut disagree on just every other facet of the city’s finances. Supporters, like Assembly member Christian, point to the Borough’s unrestricted reserve balance, projected to be $5,226,815 on June 30, 2014.

State law dictates the state maintain enough in the unrestricted reserves to fully fund borough operations for six months. The reserves currently hold enough to fund the borough’s general fund for between 10 months and a year, according to budget figures and Interim Borough Manager Jeff Jabusch.

“I’m a finance guy, and I’m happy with that balance,” he said. “I’m glad it’s there.”

The reserves are too high, and could be used to fund some of the areas for the cuts, Christian said.

“I don’t believe we have to cut funding for the schools,” he said. “I was never for that.

“The bottom line is, the city could afford to tighten its belt,” he continued.

Supporters of the current rate – like Assembly member Julie Decker – point to the same unrestricted reserves in making the case for keeping the rate the same.

“I’ve been asked ‘Why would you not use the reserves here?’” she said. “The answer is because things will change, and we’re still left with this and it’s not good for the town.”

It’s not immediately clear whether the borough assembly would intervene between the vote and the cuts to blunt their impact to popular programs, like the senior center, though assembly members on either side of the issue have said they would consider it.

For now, cut opponents, like Decker, remain focused on the pending service reductions.

“Of all the thousands of things which could be cut, these things are going to be cut,” she said. “How much are you going to ask us to give up?”

A pair of revenue increasing measures would not take effect until the following year: the borough would eliminate tax-free days making Oct. 12 the borough’s last tax-free day and increase the property tax rate by .25 mills. This means a taxpayer owning a house appraised at $200,000 – who currently pays $2,550 under the current mill rate – would pay $2,600 for the following year.

The total Sales Tax loss is estimated to be $503,000

Cuts to take effect Nov. 1:

School Contribution:

$196,948

General Fund Department Reductions:

$97,490

Lobbyist:

$31,200

Chamber of Commerce:

$25,000

Community Promotion:

$18,000

Senior Citizen Program:

$15,000

Animal Control:

$12,000

KSTK:

$9,200

Employee Appreciation:

$6,000

Lobbying Expense:

$5,000

Fireworks:

$4,000

Health Fair:

$3,000

U.S. Customs:

$1,400

Revenue Increases would take effect next year:

Eliminating Tax-Free Days: $30,000

Increase Mill Rate: $27,000

Source:

Borough Budget