Wasilla lowers sales tax

WASILLA — The Wasilla sales tax has performed better than expected over the past decade, allowing the city to lower its rate sooner than scheduled.

Still, city officials are worried economic woes are looming.

In 2001, with voter approval, the city council increased the sales tax from 2 percent to 2.5 percent to pay for the purchase and construction of the Curtis D. Menard Memorial Sports Center. The ordinance gave Wasilla until April 2011 to repay the debt.

The city announced this week it will reduce the sales tax rate by half a percent effective July 1. The reduction comes early because revenue has exceeded predictions, a city press release says.

The operation of the sports center will continue to be funded from the city’s general fund and revenue from events at the center, Wasilla Mayor Verne Rupright said.

Retiring the half percent will not affect the general fund revenue, but Rupright warned the general fund is taking a hit as consumer activity slows.

Wasilla Finance Director Troy Tankersley said the city missed its budget in fiscal year 2009 by about $270,000. The total revenue from July 1, 2008, to June 30, 2009, was just more than $11.07 million and expenses were closer to $11.344 million.

“Is that bad? No, not really. It’s like 1 percent,” Tankersley said. “But that told us maybe we have hit that platform where we might have to budget a bit tighter.”

Tankersley said the city’s revenue had been growing between 6 percent and 9 percent up until fiscal year 2009. But now, fiscal year 2010 is on track to be even lower than fiscal year 2009.

The city has collected about $7.9 million during the current fiscal year.

At this point last year, the city had collected about $8.3 million. If the city collects the same amount of revenue until June 30 as it did last year, the budget shortfall will be about $900,000 on the $11.5 million fiscal year 2010 budget, Tankersley said. He predicts the actual shortfall will be in the $700,000 to $800,000 range.

“Absolutely, that’s significant,” he said. “We’re really looking at the expenditures now and saying, ‘Do we really need it?’ The revenues aren’t there to do some of the projects.”

More than 90 percent of the city’s revenue comes from sales tax, Rupright said, and the operational costs of running the city are only going up. Taxpayers voted to allow city employees to unionize, he said, and the Mat-Su Borough has cut the money it usually gives the city for operation of the library.

Similar to Wasilla, Palmer relies on sales tax for the majority of its revenue. And similar to Wasilla, Palmer took a hit in fiscal year 2009.

Director of Administration Kelli Veech said Palmer’s total revenue in 2008 was $4.7 million. In 2009, it was $4.8 million. While that is $100,000 more in real dollars, it is a decrease of 1.7 percent when adjusted for inflation, she said.

“Early on in 2009, we were going really good, but then we started sinking in July,” Veech said. “The money we got in July was the sales tax for June. When the June geyser (water main leak) was going on, we saw a 4 percent reduction.”

Houston, by far the smallest town in the borough in terms of revenue, actually saw in increase in its sales tax income in 2009. The city earned more than $184,000 last year, compared to $125,000 in 2008, said Treasurer Carolyn Grabowski.

Contact Todd L. Disher at todd.disher@frontiersman.com or 352-2252.