To tax, or not to tax?

WASILLA — City voters will apparently be asked to raise Wasilla’s sales tax rate from 2 percent to 3 percent in the near future. How that ballot question will be presented promises to be hotly debated among Wasilla City Council members and city administration.

After rejecting Mayor Verne Rupright’s request for council to issue a special election that would raise the sales tax by 50 percent for a second time last month, council members have now put together their own proposals.

What Rupright proposed would have raised the tax by 1 percent, with half going into an account to fund capital improvement projects — beginning with a new 23,500-square-foot library. Under the mayor’s plan, the other half of the taxes collected would have been earmarked for the general fund.

In debating the plan, some on the council expressed concerns about the plan creating a “slush fund” that could be used for projects the public would have no say in approving. The only point all seemed in agreement on was that a new library is needed and raising the city’s $6 million share of the $16 million project is a priority.

Since the council indefinitely suspended Rupright’s plan at its Jan. 28 meeting, Deputy Mayor Colleen Sullivan-Leonard and councilman Steve Lovell have submitted their own sales tax proposals.

Sullivan-Leonard’s is straightforward and focuses on the library. It would ask voters to raise the sales tax by 1 percent for one year, which would raise the $6 million for the library. After that year, the tax would sunset.

“I asked the council at the last meeting if they’d be agreeable to the one cent sales tax with a sunset clause of one year,” she said. “They are, and in fact four council members have co-sponsored this.”

In addition to Sullivan-Leonard, council members Dianne Woodruff, Leone Harris and Brandon Wall have signed on to the library only option.

Councilman Steve Lovell, however, has submitted his own proposal, co-sponsored by councilman Clark Buswell. Lovell’s plan, filed with the city clerk’s office Friday, is nearly identical to Rupright’s sales tax plan. The only difference is the money spent from the half percent for capital projects would be earmarked for projects costing more than $100,000, and those projects would require voter approval.

While his written report filed with the clerk only has that change, Lovell said that’s just a starting point for a discussion. He said his vision is to also earmark the other half percent to fund the administrative and operating costs associated with capital improvements.

“The problem we had with the plan the administration put forward was that it’s just going to be a slush fund,” Lovell said. “With our ordinance, it’ll be dedicated funds. The other half will go into an account specifically to support our infrastructure.”

He said that while he agrees the library is the No. 1 project for the city, he doesn’t like Sullivan-Leonard’s proposal because all it does is raise money to build a library, but doesn’t include funding to support the increased costs of operating a larger facility.

“My heartburn with that is it gives us no operating capital to operate our new infrastructure,” he said. “What we’ve figured out is we’re going to need two more personnel, our maintenance costs are going to go up, utilities are going to go up.”

One reason the council and administration are having a hard time finding consensus on a sales tax increase is there are really three issues they’re trying to address at one time, Sullivan-Leonard said. First, there’s the need for a new library. Second is bolstering the general fund. Third is forward-funding for future capital projects after the library.

“That’s why we rely on our capital improvement plan and that way it continues to keep the public involved in the process,” she said about discussing projects on an as-needed basis. “We do know that the sales tax (revenue) has been flat for the last couple of years, but our projections show things are increasing for revenue.”

Lovell said he recognizes his proposal is very similar to the one the council already panned twice, and that he doesn’t expect it to fly. He said he hopes the council can find a compromise somewhere between his plan and Sullivan-Leonard’s.

“I don’t think my ordinance will pass as written, but I’m not sure the deputy mayor’s will either,” he said. “I think we need to sit down and hammer out a compromise. To my way of thinking, if we can all just get together and meet in the middle, I think we can find some middle ground here.”

That middle ground should include continued input from the public, city resident Ted Leonard said at the Jan. 28 council meeting.

“We need a new library, we need a new Mack Road and a lot of other roads,” he said. “But I think the citizens should have a voice in all of that, and you don’t when you put (money) into a capital project fund council can just grab from anytime they want.”

He also said contemplating a tax increase now may be a little much for some households to handle.

“Citizens of this state, and everywhere, are facing about a $1,400 increase in their payroll tax this year,” Leonard said. “So, we’re talking about adding another $300 to $400 tax … above what the citizens are already going to be paying to the federal government this year.”

While council members discuss how to fund a library and other capital projects, Rupright asked them to pay attention to the increased impact those projects would have on the city’s general fund.

“Be mindful. When they went for the half a cent for the sports arena, no matter how you cut it … we knew it wasn’t going to be a money maker, it was a quality of life thing,” he said. “If we want to raise a tax and build a building, fine. But we still have increased operation costs, so be mindful of that fact.”

Both Sullivan-Leonard’s and Lovell’s sales tax proposals will be up for introduction at the Wasilla City Council’s next meeting, 6 p.m., Feb. 25 at city hall.

Contact reporter Greg Johnson at greg.johnson@frontiersman.com or 352-2269.