Assembly panel OKs tax-break extension for manufacturers

Posted: Wednesday, October 31, 2001

The Juneau Assembly Finance Committee on Tuesday agreed to extend an ordinance that exempts local manufacturers from some property taxes. But the panel voted against expanding the provisions to businesses with 50 employees or more.

The city provides breaks in the water rates and property taxes for export manufacturers with three to 49 employees. The property tax ordinance was due to expire at the end of December, but the water rate provisions had been permanent.

Assembly members voted to continue the tax provisions with a five-year sunset clause, and placed the water-rate provision under a five-year sunset as well. The changes will go to the full Assembly for consideration.

Finance Committee Chairman Jim Powell suggested the ordinance's sunset provision be eliminated and the measure be made permanent. He also wanted the 50-employee cap removed.

"If feel very strongly about this ordinance," he said. "I care less about the number of people. If it goes up to 500, fine. The benefits from exporting products from this community are tremendous."

A motion to eliminate the 50-employee cap failed by one vote, with Jeannie Johnson, Marc Wheeler and Powell voting yes. Sally Smith, Dale Anderson, Ken Koelsch and Randy Wanamaker voted no.

Anderson said keeping a sunset clause in the ordinance gives the city a chance to tweak and improve it in five years. He said a business with five employees should be treated differently from one with 205.

"We just have to remember there's a difference between a subsidy and an incentive," he said.

An amendment from Wheeler to add businesses that manufacture computer software to the ordinance failed.

Wheeler, concerned about the 50-employee cap, also suggested the city should put together a sliding scale of exemptions for larger and smaller businesses. "I see this ordinance as an incentive in attracting new business to Juneau," he said.

Wanamaker said the city should look in a more comprehensive way at the businesses covered by and exempted from the ordinance.

City Finance Director Craig Duncan said the ordinance already includes a sliding scale for the amount a company exports. "It's not necessarily open-ended if you expand it," he said.

Four Juneau businesses now qualify for the export manufacturing tax exemption, which excused $49,200 in property taxes in calendar year 2001, according to the city. Alaskan Brewing Co. accounts for most of the total. To qualify, manufacturers must generate sales outside Juneau or reduce imports by substituting locally manufactured goods.

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