The City of Kodiak has been drawing on its general fund
to cover increasing costs, but without additional revenue or drastic cuts that
fund could be depleted. Last night the Kodiak City Council gave the first
reading of an ordinance that would increase the sales tax from six percent to
seven percent. The ordinance would also increase the amount that can be taxed
in a single transaction from $750 to $3,500.
the increase would generate an additional $3.1 million in revenue for the city,
residents might decide to make large purchases off the island and that could
affect local businesses.
first established a city sales tax in 1956 of two percent. It increased to
three percent in 1961, five percent in 1969 and finally to six percent, where
it has remained since 1993.
sales tax makes up 54 percent of the city's revenue, more than the property tax
which only brings in five percent.
from the public were all against the sales tax increase. Public testimony lasted
well over an hour with over 30 people speaking. You can listen to the story for more details.
Council members took a lot of heat from residents who were angry that the issue
of raising the sales tax seemed to appear suddenly. Several members made sure
to point out that the council has been discussing the possibility of raising
the sales tax for nearly five years.
member Charlie Davidson responded to criticism by inviting the public to take
part in the process and offer up their own solutions.
heard a lot of comments tonight. I can't say that I disagree with any of them.
I like to have people rather than tell us what we can't do or should not do,
what we can do. I challenge anybody who was here tonight to come in and check
through the budget- that's open, it's on
the Internet, it's in the office, you're welcome to come in- and you tell us
where we have been spendthrift or not duty bound in what we're trying to do for
member Terry Haines said that much of the funding for recent projects has come
from state and federal coffers and that Kodiak needs more infrastructure to
support the local economy.
happen to have a little bit of a disadvantage in that we're a small city that
requires big infrastructure in order for our industry to go on. One of the
only things that's ever been pointed out about Kodiak economy- as far as those
of similarly sized communities- is more that we're more or less a single
resource economy. Without fishing we're just not going to get by and the fact
is that we do need our big infrastructure."
John Whiddon pointed out that one major expenditure- $500,000 for the Baranof Park project- was brought to the council
by the citizens.
was a petition that went around town and over 400 signatures were gathered that
fully supported that Baranof Park project and the city should contribute to
that. I would maintain that it there was a sentence at the end of that petition
that said, "and are you willing to pay for it?" there probably wouldn't have
been 400 signatures."
city offers two alternatives to passing the one percent sale tax increase. The
first is to amend the ordinance. This alternative isn't recommended by the city
manager as the council hasn't determined any other way to meet their $3-$4
million shortfall. The other alternative is to do nothing, which the city says
would result in decreased services and would make it difficult for the council
to reach long-term goals.