Palmer approves temporary sales tax

Palmer’s council approved a temporary, one-year summer sales tax increase of one percent at its Tuesday night meeting, Feb. 24, to help finance construction of the new Palmer public library. The vote was 6 to 1 in favor, with only council member John Alcantra voting no.

Revenues raised under the tax increase will reduce the need to access city bonds for the library. Borrowed money under bonding must be paid from city property taxes, so the temporary sales tax shifts part of the burden to people who shop in Palmer, which includes summer visitors and local residents living outside the city limits who shop in Palmer, city mayor Jim Cooper has said.

The library serves many people living in the region near the city, so a sales tax is a more equitable way of sharing the burden without loading all of it on the backs of residential and commercial owners who pay property tax, Cooper said. In explaining his lone opposing vote Alcantra said he felt a sales tax is a regressive form of tax that puts an unfair burden on lower income people.

In another development a new member of the Palmer council was sworn in Tuesday evening. He is local attorney Richard Allen. This now brings the council back to full strength after a recent resignation.

On the sales tax, what the council approved, in Resolution 26-002 B was an amendment to the city’s fee schedule allowing the 1% tax increase to become effective April 1, 2026 and to expire on Oct. 31. Palmer now has a 3% sales tax which will become 4% during the seven months from April through October.

The city has funds collected for the new library including about $9.5 million in an insurance settlement paid after the effective destruction of the old Palmer library due to a roof collapse linked to heavy snow load, and a $5 million state grant secured for the library by Palmer’s State Rep. DeLena Johnson. City voters also approved $10 million in city general obligation bonds which can be tapped if needed. The general obligation bonds have not been sold yet, so no debt has been incurred yet.

The sales tax increase is a way to reduce use of the bond money. However, there is still a gap of about $6.5 million to be filled to fund the approved budget for the new construction, which is about $16 million. It is hoped that this can be covered between the new sales tax revenues and private fundraising.

Meanwhile, there are private fundraising efforts underway. The Friends of the Palmer Library, a nonprofit, has a fundraising campaign underway. Its chair, Mardene Collins, told the council Tuesday that about $200,000 has been raised for the library building fund and that more will be added when the current campaign ends. As for the temporary seasonal sales tax, those are not unusual for communities raising funds to pay for new local improvements. Wasilla did this to help fund a new library and Juneau had a temporary tax to help pay for a new municipal swimming pool.

In routine actions, the council gave authorization for city manager Kolby Zerkel to negotiate an agreement with HDL Engineering Consultants LLC to design and construct a new booster station for the city water and sewer system to replace the current Cedar Hills Booster station. The contract amount is for $252,549.