Sales tax fuels Wasilla budget

WASILLA — Although the city is facing higher health insurance costs, personnel wage increases and less assistance from outside entities, property owners will enjoy another year of no property taxes.

With the city’s sales taxes raking in 79 percent — or $11.5 million — of Wasilla’s total general fund operating revenue of $14.6 million for Fiscal Year 2012, Finance Director Troy Tankersley reported to Wasilla City Council last week that the city can afford to not place a mill levy on property owners, which had previously been estimated at about $1.9 million.

“With the mayor’s directive to stay within or reduce spending from the FY2012 adopted plan, we managed to reduce operations (not including personnel) by 4.09 percent, or $203,230, from the FY2011 adjusted budget,” Tankersley reported during a special council work session April 11. “This is the third consecutive reduction in operations over the last three fiscal years, for a total of approximately 16 percent.”

With the general population increasing by an average of 4 percent each year to about 8,144 in FY2012 from 7,831 in 2010 and an inflation increase of about 2.5 percent each year, sales tax revenue is expected to increase by 1.5 percent, he said.

One unexpected city expenditure, however, will be health insurance premiums for employees. Tankersley had figured premium costs to rise 7 percent to 15 percent — until the city recently received a letter from Aetna Health Insurance Co. informing officials it plans to raise premium rates by 59 percent.

“So that would cost the city over $800,000,” Tankersley said. “So I contacted our broker and we put Aetna on 90-day notice and have solicited other proposals.”

When a council member asked him why Aetna is raising its costs so much, Tankersley said that it’s mostly because of the passage of the new health care bill by Congress that mandates health insurance companies cover children until they are age 26 and prevents companies from disqualifying clients for pre-existing conditions.

Aetna reported it paid out $2 million in claims to Wasilla residents since the beginning of the year, but Tankersley wasn’t sure how much of that can be attributed to city employees.

Personnel costs, including benefits, comprise 52 percent of the city’s 2012 budget, or $11.8 million of the total city budget of $22.7 million. Tankersley said he’s expecting wage increases negotiating through various labor unions to go up by about 5 percent over the past year.

In the various departments, Public Safety expenditures amount to 38 percent of the overall budget, or $6.3 million; Public Works is 25 percent, or $4.1 million; general government is 15 percent, or $2.3 million; legislative costs such as the council and clerk amount to 4 percent, or $626,503; and Culture and Recreation comes to 18 percent, or $3 million.

Councilman Steve Menard was amazed to find out it costs the city about $945,000 to operate the Wasilla Library, compared to $1.3 million to operate the Curtis D. Menard Memorial Sports Center.

“Considering the patrons in the facility that we offer, it doesn’t seem like we’re getting our bang for the buck with the library,” Menard said. “We own the library building and the land already, so it’s mostly personnel costs.”

Mayor Verne Rupright reminded him that 80 percent of the library’s patrons are from outside Wasilla.

On that note, Wasilla and Palmer city councils have requested assistance from the Mat-Su Borough to operate their libraries using property taxes collected from borough residents.

Councilwoman Taffina Katkus said she spoke to borough Mayor Larry DeVilbiss about the issue and that it seems he is willing to help the cities pursue those funds.

Menard also introduced an action memorandum proposing raising the city sales tax by .5 percent on a permanent basis to not only help build a new Wasilla Library, but pay for its future maintenance and operating costs.

Menard also wants to use funds generated from a sales tax increase to pay for other local projects, such as providing new, heated turf on Wasilla High School’s football field that would enable it to be used year-round, and putting in landfill transfer stations throughout the city.

He also wanted to see some public rest areas put in so visitors passing through the city would have a reason to stop. Menard thinks it was a mistake to sunset the .5 percent sales tax that was collected to build the sports center a few years ago.

“That’s $2.5 million a year in revenue that was lost when that half penny sales tax was sunsetted,” he said.

But although fellow council members appreciated Menard’s dedication to the library and other projects, none of them said they want to see sales taxes go up — especially on a permanent basis.

Council members Dianne Woodruff and Colleen Sullivan-Leonard and Katkus said it would be difficult to sell voters on such a tax increase without first having a concrete plan for a new library in hand.

Besides, residents are having a hard enough time paying for basic needs as it is, Sullivan-Leonard said.

“There is a quality of life here and a one-half percent sales tax that would be permanent is not the way I see our government in the future,” Katkus said. “I’d like to see some of these ideas developed, but I’m opposed to a sales tax increase unless it’s for something we really, really need.”

Councilman Doug Holler said he doubts voters would pass such a tax since the one for the sports complex barely passed and it wasn’t permanent.

Councilwoman Leone Harris said she’d be afraid future councils would abuse a permanent sales tax increase.

Although he was disappointed, Menard vowed to continue to find solutions in the future.

“We’ll battle it down the line if you want to kick the can down the trail a little longer,” he said. “I just get impatient sometimes with the wheels of government and how slowly it all moves.”

Contact K.T. McKee at kate.mckee@frontiersman.com or 352-2252.