Big spenders could pay more sales tax under a proposal to raise Ketchikan’s single-unit sales tax cap. The topic is scheduled to come before the community’s Borough Assembly Monday evening. The borough currently charges sales tax on the first $2,000 of most purchases. The proposal up for debate would raise that to $12,000 effective April 1. That’s similar to the caps in Juneau and Sitka.
Rents on houses and apartments would be exempt from the higher cap. Sales tax would continue to be charged only on the first $1,000 of residential rents.
The assembly first discussed the plan last month before voting to postpone it until after the Oct. 4 election. Supporters cast it as a means to address a deficit in the account that provides the borough’s portion of public school funding. The Local Education Fund is expected to reach a statutory $2 million minimum balance this year.
Opponents said the plan to raise the sales tax cap was premature and should be voted on alongside a plan to dedicate roughly $1.2 million federal funding to the Local Education Fund.
It’s unclear how much money raising the tax cap would bring in — Assistant Borough Manager Cynna Gubatayao says borough officials only have access to summarized data that does not allow them to calculate the impact of a higher sales tax cap on the budget.
In other business, Ketchikan’s Borough Assembly will consider a first step towards regulating short-term rentals. The ordinance up for an initial vote Monday would require owners of short-term rental properties to apply for an annual permit from the borough. Short-term rentals are not currently covered by borough code.
There would not be any special requirements to get a short-term rental permit — Planning Director Richard Harney says the measure would explicitly allow short-term rentals in any residential zone.
“The permits will be administratively decided at this point,” Harney said in a phone interview last month. “Really, it’s just a registration process. That’s all we’re looking for.”
Harney says it’s an effort to gather data about how many short-term rental properties exist in Ketchikan.
“We would like to just get a really good idea of what vacation rentals are out there — how many there are, where they’re located, those types of things — and figure out who’s running these vacation rentals in town, just to find out if there is an impact on our housing,” he said.
Studies in other communities have found vacation rentals are a primary contributor to high rents and housing shortages, Harney said. Borough officials say the permitting program would also ensure owners are aware they’re required to pay sales taxes.
Ketchikan’s Borough Assembly meets at 5 p.m. to certify the Oct. 4 municipal election and swear in its new and returning members: Borough Mayor Rodney Dial and Assembly Member Austin Otos will each start their second three-year terms in office. Glen Thompson will begin his fifth term on the assembly after a few years away from government.
The assembly’s regular meeting follows at 5:30. Residents can speak to the assembly at the beginning of the meeting or during public hearings. The meeting is broadcast on the borough’s website and local cable channels.