City scores on pulltabs

Judge says operators must pay up

Posted: Thursday, February 01, 2001

The latest round in a $900,000 battle between Juneau and pulltab operators who refuse to pay sales taxes has been decided in favor of the city.

On Wednesday, retired Justice Jay Rabinowitz turned down the appeal by Last Chance Co-op, Multiple Charities Association Co-op and Alaska Native Brotherhood Camp 2 of a city administrative decision that the 1996 1 percent sales tax increase applies to the pulltabs and that the tax was to be collected on gross receipts.

Rabinowitz also threw out the pulltabs' request for a trial to determine the facts of the case, and granted the city's request for a summary judgment for payment of about $900,000 in back taxes, interest and penalties.

"It rules in favor of the city on all issues," said Assistant City Attorney John Hartle, who represented the city in oral arguments before Rabinowitz last Friday. "It shows me the (city) sales tax administrator made a good call in her original determination" that the pulltab operators had to pay the tax in the manner requested by the city. "The city has been saying this from Day One."

The operators - dubbed Multiple Beneficiary Permittees by the state - have the right to appeal the Superior Court decision to the state Supreme Court, according to City Attorney John Corso. "But these are gamblers," he said. "They know when to hold 'em and when to fold 'em."

Asked about an assertion by MBP attorney John Rice that the city was ready to foreclose on the Alaska Native Brotherhood Hall, Hartle said the city's collections department routinely establishes such liens, but that the city is more likely to try to formulate a "reasonable payment plan" to recover the money.

But whether the city can legally collect from an MBP's current revenues to redress past violations may need to be clarified by a change in state regulations, said Juneau Assembly member Cathy Munoz. Munoz is also chairwoman of the assembly Finance Committee and has been emphatic about collecting from MBPs that are past due.

A measure to be introduced at Monday's assembly meeting may take the form of a resolution going to Juneau's legislative delegation and asking state legislators to change Gaming Division regulations to allow municipalities to collect from present revenues for debts established in the past.

"We will also review an ordinance that won't allow organizations to appeal delinquencies unless they pay the arrears first," Munoz said. "You can't blatantly ignore the tax that is due."

The MBPs did in fact appeal the city decision last summer without paying the disputed tax first.

"The assembly is also interested in having input into the gaming permit before the gaming board issues it" to the MBP, Munoz said.

Munoz likened the process to state-issued liquor licenses, which routinely come under city review before they are granted or renewed - or rejected if the licensee is found by the assembly's Human Resources Committee not to be in compliance with city code.

A reinterpretation of state regulations to allow collection from current revenues for past debts may still not be enough to precipitate collection - at least from Last Chance Co-op. In January, the state took away that MBP's 2001 pulltab permit after finding Last Chance hadn't distributed enough of its take to charities since 1995, as mandated by state regulation.

Asked about repeated complaints by MBP operators that the combination of the city's 5 percent sales tax and the high prize payout - in some cases, 80 percent - was ruinous to the pulltab operations and prevented them from distributing money to charities, Hartle said, "As for the tax, that's a policy call for the assembly."

And as for the prize payout, "that's completely at the discretion of the sellers," he said.

MBP attorney Rice did not return calls requesting comment.

Fernand Chandonnet can be reached at

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