City wants to look at pulltab charities' books

Assembly members call for more information to decide whether to grant a tax break

Posted: Wednesday, March 14, 2001

The city wants to see more financial data from charities that benefit from pulltab sales before it considers giving them a tax break.

The charities want to repay back sales taxes but can't afford to do so without some reduction in future taxes, they told the Juneau Assembly pulltab subcommittee and several city administrators Tuesday.

The city is looking at a payment plan, but it doesn't want to put the pulltabs out of business and hurt the charities, said Assembly member Don Etheridge.

"If we come in and demand the sales tax money now, they're out of business and we don't get the money," Etheridge said after the meeting. The city would have to look at a way to keep youth sports running, he added.

If the charities can get some kind of tax relief downstream, they will do their best to make up for past taxes, said Bob Rehfeld, president of the Rebounders Club, which supports women's basketball at Juneau-Douglas High School.

The charities have asked the city not to tax pulltabs, or change the tax to apply to their income after payouts to pulltab players.

"We feel like the only way we can continue to survive ... is by getting some kind of relief," Rehfeld told city officials.

Assembly member Cathy Munoz said the city has to know what the pulltabs' financial books look like before it considers any policy changes.

Charities that operated under three state gaming permits owe the city about $628,000 in sales taxes, $280,000 in interest and penalties, and $68,000 in attorney fees. The state also took away one of those permits until October 2001, benefiting two Juneau charities and several others around the state, because it didn't pay enough to charities.

The three permitees recently lost an appeal in state Superior Court of the city's determination that a 1 percent increase in sales tax, effective in 1997, applied to pulltabs and the sales tax was to be collected on gross receipts. The charities in the dispute stopped paying the 5 percent sales tax in late 1997 or early 1998.

Mark Hickey, an assistant JDHS baseball coach, said students' fees and their own fund-raising brings in only 20 percent of the team's needed funds. Pulltabs provide the rest, he said.

The pulltabs pay out as much as 80 percent of their receipts to pulltab players. Of the remaining receipts, the state requires at least 30 percent go to the charities. The rest of the cash collected goes toward expenses and sales taxes.

Charities that owe taxes run pulltabs in parlors, as opposed to bars, and said expenses such as rent and payroll make it impossible to pay city taxes. If they use pulltab games that have a lower payout, freeing up some revenue, they'll lose out to pulltabs that offer a high payout, the charities said.

"Ideally, the sales tax is supposed to be collected," said state gaming unit supervisor Jeff Prather today. "It's not an expense. It's just something that's collected from the customer and remitted to the borough."

But the charities in the dispute don't collect $1.05 for a $1 pulltab. They've told the city the fast-paced nature of the game makes it impractical to do so. That puts the focus on the charities' expenses. City Finance Director Craig Duncan said the city, before considering tax relief, has to be comfortable the pulltabs are running as efficiently as they can and still can't afford to pay taxes and meet state financial requirements.

Eric Fry can be reached at efry@juneauempire.com.



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