The Wrangell Borough Assembly held a work session on top of their regular meeting Tuesday, Sept. 24. The work session was to discuss the Alaska Municipal Sales Tax Authority, a statewide entity that the Alaska Municipal League is currently working to organize. The tax authority is meant to act as the "clearinghouse" for tax collection from remote retailers, according to the agenda packet. For towns like Wrangell, only large online retailers like Amazon meet certain thresholds to collect and remit local sales taxes. Aleisha Mollen, who is on the committee for this project, said that this threshold is $100,000 in sales or 100 sales. With a statewide tax authority like the one being put together, online retail business would be measured on a state level instead of a local level, meaning thresholds would be measured across the state and not in just local municipalities. Mollen said that Wrangell is potentially looking at an additional $320,000 in sales tax revenue.
What would be required from Wrangell, the agenda packet reads, is the adoption of various resolutions into the code of ordinances, according to Mollen. The current sales tax code would remain the same for local businesses. The Alaska Municipal League hopes to have at least seven municipalities ready to sign a compact to create the tax authority at their annual meeting on Nov. 21. There would be some fees involved in joining the tax authority, Mollen said. The AML would charge $1,200 a year, then a company they are contracting with would also take approximately 7.5 percent of the city's online sales tax revenue.
As this was a discussion item, no action was taken. However, Mayor Steve Prysunka voiced some reluctance to the idea, wondering if a 7.5 percent fee was worth whatever extra revenue could be made from smaller retailers, or if just taking the money from Amazon and not paying any fee on that was enough. Other members of the assembly pointed out that $320,000 was a lot of money to potentially just leave on the table, fees or no. Mollen added there would be no contracts to stay in the tax authority for any length of time, and Wrangell could leave at any point if it decided to join.
Moving on to the regular meeting, one of the first items the assembly covered was a motion to refund Wrangell residents Arnold and Alice Bakke for overpaid property taxes. Borough Manager Lisa Von Bargen and Helen Keller, representing her parents, the Bakkes, explained the situation. Due to errors on the part of the assessor, the Bakke family has been overcharged on their property taxes since their home was first constructed in 1994. When the mistakes were discovered, Keller approached the borough to get them corrected in 2013. However, the issue did not get resolved then. Keller then came back this year to see about getting her parents' money refunded.
According to the agenda packet, the outstanding balance from 1994 to 2019 is a little over $12,000. Von Bargen said that the borough could also consider a six-year statute of limitations on seeking a refund for overpaid taxes. The recommendation brought before the assembly was to pay the Bakke family $4,334.667, which Von Bargen explained was for the past six years of overpaid property taxes from 2007-2012, when the issue was first brought up, plus interest through to 2019.
This item caused lots of discussion among the assembly. Assembly Member David Powell said that he felt it was the right thing to do to pay the Bakke family the full amount they were owed. Prysunka replied by saying that ignoring the six-year statute of limitations could open a big can of worms, and people finding errors on their taxes from decades ago could come forward and cost the city a lot of money. Assembly Member Patty Gilbert suggested that Von Bargen and the city attorney negotiate a price with the Bakkes and Keller, but this was rejected after some discussion. Eventually, the assembly agreed that the item needed to be postponed until they were certain what numbers they were dealing with. Powell said that he also wanted a written opinion from the city attorney when this was brought up in the next meeting, and Assembly Member Anne Morrison asked if they could see if the assessor was liable for the mistakes that caused the problem in the first place.
Other items covered in the meeting include approval of a professional services agreement with JB Rewards Systems for an employee compensation and classification study in the amount of $25,000, approval of the purchase of a fire pumper truck for a total cost up to $450,000, and approval of the use of $240,000 from the State of Alaska Hospital Grant for the construction of a pharmacy on the new hospital campus.
Reader Comments(0)