Wasilla Council eyes retention of 1 percent sales tax increase

WASILLA — City voters are a step closer to asking voters to make a 1 percent sales tax increase permanent after it was approved by voters specifically to fund a new library.

Fueled by a 5-1 city council vote Monday night, the measure is next schedule for a July 27 public hearing. If approved by the council, Wasilla voters would see the question on their ballots in the fall election.

Voters originally approved a temporary 1 percent increase in 2013, which pushed the overall sales tax rate in Wasilla from 2 percent to 3 percent to generate $15 million for construction of a new library.

Borough finance director Troy Tankersley told council members he anticipates reaching the threshold to end the tax by February 2016.

Wasilla mayor Bert Cottle said the revenue from a permanent 3 percent sales tax would add much needed funds to city coffers, both to cover operating expenses traditionally funded by the state, and also to cover the expense of projected capital needs. According to city estimates, Wasilla has received $51 million in state and federal funding in the last 15 years. Less funding is expected in the future from federal and state sources, Cottle said.

“The revenues that we’ve been enjoying from everyone else, unless someone here knows more than I’m hearing today, or more than I’ve heard for the last five years, it’s not coming,” he said. “So to enjoy the quality of life that we have now, just to keep what we got, who’s going to pay for it?”

He specifically cited the Curtis D. Menard Memorial Sports Center, which costs the city more than $500,000 a year, as an example of a facility where construction costs had been funded, but operating costs had not.

The 1 percent increase would add $6 million a year to city coffers, the majority of which would fund capital projects, like airport improvements, and some recent additions, and lights and other fixtures for a proposed downtown overlay district.

Under the current rates, the city’s general fund balance would gradually be drawn down as a result. The generally accepted minimum balance is 50 percent of annual revenues, Tankersly told the council. Though officials couldn’t say when the general fund would reach that threshold, they promised to return with a projection for the following meeting. Revenues total more than $16 million, and the fund balance is expected to be slightly more than $8 million by the end of the year, according to figures presented in the approved 2016 budget, with about $200,000 coming from the fund.

The move isn’t without critics. Councilwoman Colleen Sullivan-Leonard wrote a letter to the editor of the Frontiersman opposing the increase, and Monday she cast the lone dissenting vote against the proposition. Financial statements do not show a deficit, Sullivan-Leonard said. She said the perceived “gap” is in the budget, which is only an estimation of what will be spent.

“The sky isn’t falling like people are saying,” Sullivan-Leonard said.

“I’m not saying the sky is falling,” Tankersly replied. “I don’t think I’ve said that.”

The need for more revenues could lead to a sales tax or a property tax. But because Wasilla is the Valley’s commercial center, a sales tax increase would spread the cost across the entire Valley consumer base, as opposed to a property tax, which would be borne by just Wasilla residents, several council members said.

A few local residents turned out to speak to the proposed change.

For Anne Kilkenny, the bottom line was perception. Voters who approved a tax increase with a sunset clause would see the issue as a betrayal, she said.

“Perception is reality,” she said. “I haven’t been here for a while, and I’m stunned to see what’s happened to this room.”

Minor renovations to the city council chambers, including painting the blinds and some wallpaper replacement, were completed in January.

Kilkenny also said another agenda item relating to the potential sale of the revenue generating Meta Rose Square Building appeared to run counter to claims of fiscal responsibility.

“Everybody here at this table who’s nodded their head and says ‘government should act more like business’ would not be in a hurry to sell something that makes money,” she said.

The Meta-Rose Square resolution, which would lay out how the building will be sold, also moved forward on a 4-2 vote, with councilmen Stu Graham and David Wilson opposed.

Former city councilwoman Dianne Woodruff said she didn’t oppose the tax increase, but expressed concern about the timing of the measure.

“I like the idea we would go back to the public for the 1 percent, but I think the timing is not great,” she said.

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.