Ketchikan’s City Council is scheduled to take up a seasonal sales tax proposal on Thursday. The plan would increase the city’s 4% sales tax to 5% between the beginning of April and the end of September in an effort to take advantage of the summer tourism season. The proposal would take effect next year and is estimated to bring in $1.9 million a year.
Council members directed city officials to draft the tax proposal during a closed-door session in June, according to the city’s finance director, Michelle Johansen.
Acting manager Lacey Simpson says the city is in desperate need of new revenue. A memo to the council paints a bleak picture of city finances: Simpson says the city’s main bank account, which funds things like firefighters, ambulances and police, is facing a $2.2 million shortfall this year as the community’s tourism economy recovers. She says the budget problem was exacerbated by the City Council’s decision earlier this year to hold property taxes steady rather than go forward with a long-deferred rate increase.
Then, earlier this month, the council authorized a 2% cost of living raise and changes to health insurance co-pays for city workers represented by the International Brotherhood of Electrical Workers Local 1547. A similar raise for non-union employees is up for a vote this Thursday. Together, the raises are forecast to cost $3.9 million over three years. And Simpson says that even with the pay increases, city salaries for some positions are not keeping pace with other municipalities or private sector wages. And that makes it harder to attract workers.
Simpson recommends the council go forward with the seasonal sales tax proposal. Because Ketchikan’s city and borough governments each charge a sales tax, the total sales tax charged to consumers within city limits would rise from 6.5% to 7.5% during the summer months.
In other business, council members are scheduled to take a second vote on a proposal to limit the mayor and council members to three consecutive terms in office. If approved, the charter amendment would come back for one more vote in August before it’s placed on this October’s municipal ballot.
Ketchikan’s City Council meets at 7 p.m. Thursday at City Hall. Members of the public have a chance to weigh in at the beginning of the meeting. The meeting is livestreamed on local cable channels and the city’s website.