Wasilla City Council votes to fund tax study

WASILLA — The Wasilla City Council voted 4-2 in favor of funding a study by the Alaska Municipal League on future collection of online sales tax.

The council asked questions of Nils Andreassen, executive director of AML, who had called into the meeting.

“The scope of work that AML has put forward for contribution by the city of Wasilla and other municipalities is really to help answer those questions,” Andreassen said. “I think it’s important to note that an online sales tax isn’t a new tax, that it’s only the existing sales tax that each jurisdiction already has on its books that has not been implemented by online retailers until this year.”

Andreassen said that projected sales tax revenues in the state of Alaska could be around $40 million dollars, but that is a very rough estimate. This study by AML comes from the supreme court’s decision in 2018 in Wayfair v. South Dakota, allowing municipalities to collect sales tax from companies without brick-and-mortar structures inside city limits who deliver goods purchased online. Wasilla has no property tax and relies on sales taxes to fund government services.

“This is not a new tax. If you’ll read our tax in the code, online sales tax is not prohibited. So this will give us a seat at the table to what may or may not come down and for a city that depends on sales tax for everything, our infrastructure, our snow removal, whatever we’re doing, then I do think that we definitely do need a seat at the table,” Councilwoman Glenda Ledford said.

Councilman Tim Burney was passionate in speaking in opposition of the ordinance.

“I don’t agree with it. I think that this ordinance shouldn’t even come to this floor, we make plenty of money,” Burney said. “At a certain point, we have got to stop this. There’s not going to be anything left to tax.”

Burney banged his fist on his desk and argued that even if funding the study did not require Wasilla to collect online sales tax, the city should not even be at the negotiating table.

“I think we should stand tall for our people and say nope, Wasilla does not need another tax,” Burney said.

Finance Director Troy Tankersly was asked specifically to be a part of the panel that will study how the tax would be implemented. The online sales tax would not necessarily be applied equally over all of the cities, which do choose to implement it. Different cities have different tax structures, caps, and exemptions. Andnreassen reported that Juneau, Ketchikan, Bethel, Soldotna and Kenai have already bought into the study. Residents within the city of Wasilla pay only 13 mils, compared to 19 in Fairbanks. Stu Graham noted that Kenai has an 8.75 percent sales tax.

“What we’re here to talk about tonight is do we want to protect our revenue stream? Do we want to protect our zero percent mill rate by being able to use sales tax as essentially our sole source of city collected revenue to pay for services,” Graham said. “The idea of taxation, if you go all the way back to the Boston tea party wasn’t about paying taxes, it was about paying a fair share of taxes and that’s what this is here.”

Graham argued that the city should protect possible future revenue streams. Deputy Mayor James Harvey did not believe that paying for the study would allow the city not to collect online sales taxes in the future.

“We’re doing pretty well we maintain an operating budget that's sustainable for what we have. You can spin it however you want it, it’s a new tax,” Harvey said.

Every single member of the council felt the need to comment during discussion of the ordinance. Wasilla Mayor Bert Cottle informed the council that the city already collects some online sales tax checks from companies doing business within city limits. Following the study, implementation is believed to be two to three years off at best. Cottle was particularly interested in having local control over the outcome.

“We always want local control,” Cottle said. “We have a chance to be at the table and help write this.”

The ordinance passed with Harvey and Burney in opposition.

** Editor’s Note: The Frontiersman published an article on Jan. 16 that stated that Wasilla had already voted on the issue, when in fact they had only voted on bringing ordinance 19-01 before the public. Contact Frontiersman reporter Tim Rockey at tim.rockey@frontiersman.com.