Palmer considers 1% temporary sales tax hike to help pay for new library

Palmer’s council voted Feb. 10 to delay a decision on a temporary 1% hike in the city’s 3% sales tax to help pay for the community’s new library after council member Sherry Carrington said more time is needed for local businesses to weigh the effect of the increase.

If approved by the council the increase would go into effect April one and end at the end of October, 2027. It would be in effect for two summers.

In public comments during the meeting, however, local business owners said they were worried the increase might be just enough to discourage local purchases, sending the business to Wasilla, which has a lower sales tax or to Anchorage, which has no sales tax.

This would increase Palmer’s rate during the summer to 4%, which would be a noticeable difference from Wasilla’s 2.5% tax, local merchants said. Although the decision was delayed the matter will come up again at the council’s Feb. 24 meeting.

Mayor Jim Cooper defended the proposal at the Feb. 10 meeting. The increase would be temporary and be in effect for two summers, being a seasonal tax increase. Temporary taxes are not uncommon among Alaska municipalities to help pay for special projects, Cooper said. Wasilla did one to help pay for its new library and Juneau had a temporary sales tax increase to help pay for a new municipal swimming pool, he said.

What’s important in Palmer is that if proceeds from general obligation bond are used for library construction the burden for payment falls on local property owners through an increase in property taxes. A sales tax, Cooper said, will be paid mainly by people who live outside the city limits and who shop in Palmer and by summer visitors who live outside the city and borough.

The city has $10 million in general bond obligation authority approved by voters for the library although no bonds have been sold yet, or debt incurred. But if bond debt is used the burden is imposed unfairly on property owners in Palmer, the mayor argued.

“Only 18% of library users live in the city. About 82% live outside the city,” and would not help pay the library debt through property tax. They would help pay for the library through a sales tax increase, however.

“There are 15,000 to 20,000 people who live in the area and who come to Palmer to shop. I don’t believe a lot of people will drive another 15 miles to Wasilla with gas at $4 a gallon,” Cooper said. In contrast, if the $10 million in authorized bonds are used local property taxpayers will also pay $740,000 per year for interest on the bonds.

“I don’t want to see local property owners saddled with 20 years of bond payments if we can just pay for two summers and get it over with,” Cooper said. Council members acknowledged, however, that the amount of revenue the 1 percent tax would bring in is unknown, as is the final construction cost of the library.

In other matters Feb. 10 the city’s consultant on the new downtown parking and pedestrian access strategic plan briefed the council on progress. Representatives of RESPEC, the consulting firm, told the council that a draft strategic plan has been prepared that will go first to the city planning and zoning commission and, if approved, to the city council.

Surveys of residents and business owners in Palmer resulted in 339 responses from the public and nine comments from 23 local business owners, the council was told. Comments were generally supportive, but there were suggestions of more safety markings of access points during downtown events as well as pedestrian and bicycle paths.

These are being incorporated into the plan. Suggestions were also made that more data is needed on the numbers of people coming in and out of Palmer during events. More discussion will be held on parts of the plan dealing with reserved parking for local businesses. One idea being considered is dedicated retail parking that is shared between two businesses.

One local retail operator said this could create liability problems for the two business operators. In practical terms many local retailers allow shared space anyway. Another suggestion was that the city could facilitate shared space arrangements by drafting and sharing draft contracts for business owners to review.