The North Pole City Council is looking at increased sales taxes. Mayor Bryce Ward has proposed the hikes to cover an anticipated $180,000-plus revenue shortfall. The public turned out in opposition to the tax increases at a City Council meeting Monday night. But the council plans to reconsider a revamped version of the mayor’s proposal next week.
Ward says North Pole must increase its sales tax from 4 percent to 4½ percent to head off big cuts in services due to a looming revenue shortfall caused mainly by the prospect of a property tax cut for the Flint Hills Resources-Alaska refinery – the city’s biggest source of those revenues. The company shut down facility last summer and now uses it as a fuel terminal.
North Pole businessman Mike Gendreau led off a lineup of area residents Monday who say the proposal would make it even harder for businesses.
“It’s so hard to have a small business in this community,” he said, “because we’re all at such a disadvantage, because the other cities do not have a sales tax.”
Jeff Howe says the sales tax has already discourages him from making purchases in the town he’s lived in for 32 years.
“I don’t buy anything in North Pole,” Howe said. “I’m in Fairbanks buying my gas. I go to dinner in Fairbanks. I do everything in Fairbanks now. I might get a soda every now and then at the Sourdough Fuel.”
Tammy Wilson represents North Pole in the Legislature, and she says councilmembers should cut services instead of raising taxes, because lower oil production and prices will force the state government to reduce funding to municipalities.
“The state has no money,” Wilson said. “OK, so, revenue sharing, most likely, you’ll be lucky if you get any, because it’s based on having so much money, so much throughput. If you don’t know that already, we have low throughput, low prices.”
Councilmembers responded by saying the sales-tax hike is modest and, as Councilman Tom McGhee pointed out, it was proposed after they crafted a no-frills budget for 2015.
“We are not increasing any employees,” McGhee said. “We’re barely maintaining what we have. We’re not increasing any wages or fees.”
In the end, the council decided against the tax hike, and another proposal to raise the sales tax cap from $8 to $10 on purchases of $200 or more. The council did increase taxes on alcohol, by 1 percent, and tobacco, by 2 percent.
Ward said Tuesday the sales tax hike also would’ve made it possible to hold down property taxes for North Pole’s 2,200 residents by sharing the burden of raising revenue with the 20,000 or so people who live outside of town but who shop there and use its services.
“So, part of the sales tax saying that the people who come in and use those services are the ones who pay for those services,” he said.
Ward says he’s looking into some changes to the proposals when the ordinance comes back before the council in next Monday’s meeting for a final vote.