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Wrangell considers sales tax reduction

Posted: September 29, 2013 - 12:11am

WRANGELL — Wrangell residents will determine Tuesday whether city-borough sales tax will drop from 7 percent to 5.5 percent.

Voters will act on a ballot initiative on sales tax that’s the highest, along with Kodiak, in the state.

The sales tax brings in about $503,000 a year. It supports basic services such as police and public schools plus extras such as the spring health fair and Fourth of July fireworks, KSTK-radio reported. The public radio station itself receives money from the city and borough and faces a cut of $9,200 if the initiative passes.

“The city, through their tax dollars, are obligated to have water, sewer, police protection and all the rest of that type of entity for the public,” said former Mayor Don McConachie said. “They are not required to have the amenities; the amenities being funding for the radio station, X amount of dollars it is giving to the fireworks, X amount of dollars it has given to other outside interests.”

Interim borough manager Jeff Jabusch helped write the initiative when he worked as the finance director. Approving the reduction would mean substantial changes, he said, including the end of two annual tax-free shopping days.

Property tax would go up to offset sales tax losses, he said. He also anticipated spending cuts.

“We are used to certain things happening all year round,” McConachie said. “I think you will find people will not enjoy not having snow plowed on a regular basis — where they’re going to wait until there’s two inches of snow out before they send a plow out and different things like that.”

Public school funding would be in line for a nearly $200,000 reduction in local contribution. The state several years ago lowered municipalities’ minimum schools contribution but Wrangell officials kept the higher rate. The borough also passes through certain federal funding.

“So the total we give them is like $1.5 million,” Jabusch said. “But from taxes — sales tax and property taxes — the amount has been somewhere around $600,000.”

Jabusch said schools may not be hurt immediately but concerns exist about the future.

“As the federal money dries up, and we’re anticipating that, it’s going to be more difficult, if we go back to the $400,000, to come up with some additional money for them down the road,” Jabusch said. “Whereas, if you leave it where it’s at, you’re in a better position down the road.”

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