State-imposed tax exemptions could cost Palmer

PALMER -- Mayor Jim Cooper reported both good and bad news to the Palmer City Council after a recent trip to Juneau. Cooper was frustrated by the Alaska Legislature's budget talks -- a process Cooper said "changes every 10 minutes" -- but was encouraged by a meeting with Department of Transportation Commissioner Joseph Perkins, that was arranged by state Sen. Lyda Green, R-Mat-Su.

In the meeting with Green and Perkins, Cooper lobbied for state funds to help with rebuilding Eagle Avenue, which runs east to west between the Glenn Highway and North Gulkana Street on the north side of town. Other transportation issues were discussed in the meeting as well, but Cooper was most enthusiastic about Eagle Avenue in his report to the council. Cooper said the state might assist Palmer on the Eagle Avenue project with up to $1 million.

"You can put me down in Juneau for days as long as something like this comes out of it," Cooper said.

The city of Palmer paid for Cooper's Juneau trip. He attended the annual conference of the Alaska Municipal League, which takes place in Juneau each year during the legislative session. On the subject of taxes, Cooper said Palmer wasn't the only local government concerned about the prospect of the state imposing a sales tax. One proposal, House Bill 303, has language that would require local sales taxes to conform with the state sales-tax exemptions.

"The concern that we have is that the exemptions the state has put on [a proposed sales tax] are different from the city's. As a result of the exemptions the state put in Palmer would lose $500,000," Cooper said.

Palmer City Manager Tom Healy has sent a letter to Green and Rep. Scott Ogan, R-Palmer, that shows the effect of HB 303 on Palmer's income. HB 303 would exempt taxes on purchases of motor fuel, heating fuel and utility services. Together those three raise about $570,000 for Palmer, Healy's letter said, an amount equal to 10 percent of the city's total general fund revenue. Healy's letter pointed out that HB 303 would force Palmer to raise other local taxes.

On the subject of road money, Cooper said state funds for Eagle Avenue aren't a sure thing yet, but he said Perkins was receptive to the city's needs, especially given the fact that the city has committed to spending $400,000 of its own money on the project.

"That has been in our budget for a couple of years," Cooper said after the meeting. "It's ready and it's available."

Cooper said state officials are more receptive to projects in which local governments contribute to construction and show a commitment to future maintenance.

The city expects Eagle Avenue to have increased traffic when the Mat-Su Borough School District opens a new building for Sherrod Elementary School. The Sherrod replacement school site is on 24 acres located immediately north of Swanson Elementary School on Gulkana Street. The district plans to open the school in fall 2003, according to district spokesperson Kim Floyd, who said the new school will have a capacity of 488 students. The current Sherrod Elementary School building has a capacity of 406, students but has 438 enrolled, Floyd said.

The district is considering using the current Sherrod building for a central administration building. The administrative offices are currently in three separate locations in Palmer, according to Floyd, who said the goal is to serve the public better by bringing all administration officials under one roof. That move is also likely to increase traffic on Gulkana and Eagle.

According to Cooper, preliminary estimates for Eagle Avenue put the project's price tag at about $1.4 million. The project would include pavement, sidewalks, storm water collection and utility improvements.