NOME -- Local nonprofits and churches will remain exempt from city sales tax, and retailers won't have their unsold inventories taxed, but efforts to charge property tax on aircraft moved forward at Monday's Nome City Council meeting.
A packed house gathered in council chambers to hear the introduction, or "first reading," of three ordinances meant to bring in more revenue for the city. The council wasn't able to debate the issues -- that debate is only allowed on "second reading" -- but that didn't stop small businesses owners, nonprofit directors, and residents from telling the council their thoughts. And those thoughts were a chorus of rejection for all three proposals.
On the sales tax exemption issue, Danielle Slingsby with the Nome Community Center that runs the town food bank, the Nome Children's Home, which provides transitional housing for youth, and the XYZ Senior Center, said ending the exemption would have a direct impact on services.
"All of our purchases are direct program purchases, so anything we purchase, we try to support local business as much as we can," she said, addressing the council and the more than two dozen people in the audience. "I think if you take (the sales tax exemption) away from nonprofits, you're basically just taking away services from the people of Nome."
Melanie Bahnke, president of the regional nonprofit Kawerak, said the services it provides are ones usually performed by government agencies, and noted those agencies would remain exempt from sales tax with the proposal under consideration.
"Many of these programs exist because Kawerak assumed the functions of the federal government to deliver these services," Bahnke said. "The federal government enjoys the benefit of the exemption. It would seem to penalize the tribal governments in this region for exerting self-governance by taxing these programs because they are not operated by the federal government."
Though the sales-tax exemption issue would have impacted faith-based organizations like churches, no one from the roughly dozen or so churches in Nome spoke on the issue.
Levying tax on business inventories was characterized by many business owners as a "double tax," with a tax assessed when items sit on the shelf and again when they are sold and subject to Nome's 5 percent sales tax. Barb Nichols with the Nome Chamber of Commerce received a round of applause from members of the public after she spoke against taxing business inventories.
"This additional cost can't be shown on receipts, such as a retail sales tax," Nichols argued. "The impact of these non-transparent taxes are hidden to most consumers, and an invisible issue to most voters."
Nichols also spoke to the timing of the new tax, which would have gone into effect Jan. 1. "Our business community has already ordered and received their goods, to last through our long winters, to ensure the community has what it needs. Now, without any notice, this exemption could be removed this year.
"This is not about business profit," Nichols summarized. "Removing this exemption will dig even further into the ever-slimming wallets of all of our community members. These businesses should be celebrated, not double taxed."
While dislike for the proposals was nearly unanimous, Rolland Trowbridge of Trinity Sails and Repair (and KNOM's chief engineer) took the podium. Without expressing support or opposition of any particular ordinance, he emphasized the need for organizations and individuals to be more willing to support a city that allows the nonprofits and businesses to exist.
"There's a lot of businesses going on in Nome where sales tax isn't being collected. A lot of people doing business on the side, repairs, that kind of stuff where they're just taking cash money. And for those people doing that, you're not helping yourself, you're not helping anybody, because that is what it costs to run this town," Trowbridge said. "The reality is I depend on this city to function correctly for my business to operate, and so do the nonprofits. We all need to start saying, 'OK, where do we want the money to come from?'"
Many speakers called on the city to get its own financial house in order before raising taxes, but City Manager Josephine Bahnke says it wasn't a ballooning city budget, but rather roughly $800,000 in state and federal funding shortfalls that has led to the current deficit. She said the new tax proposals were not considered on a whim.
"We did make cuts, we did get down to a bare-bones budget. This year our operating budget has gone down, we all continue to deal with health care costs rising … The discussion was around how we could make up for that approximately $800,000 … I think the idea of [sales tax] exemptions, consequent with meetings with the city attorney, led us down that road," Josephine Bahnke said.
Fresh from attending last week's Alaska Municipal League gathering of city administrators from around the state, Josephine Bahnke said other Alaska cities, large and small, are facing similar budget shortfalls and identical scrambles for revenue, raising questions of just what jobs people expect their city to perform.
As the motion was made to approve the sales tax exemption, the chambers got quiet as people waited for a council member to offer a second and move it forward. But the ordinance died on the table with council members remaining silent. The proposal to tax business inventories also failed by a vote of 3-2.
Just one proposal was passed for a second reading: assessing property tax on aircraft, which brought Paul Costo, Alaska Airlines' local station manager, to the podium to tell council members that taxing airplanes could send businesses to other hubs like Bethel, Kotzebue, or Unalakleet.
"There's some real-life ramifications for the airline industry if you were to start taxing aircraft," Costo said. "Nome would lose not only aircraft, they would lose services and they would lose jobs."
Costo added that few other Alaska cities collect property tax on planes, and when they do, it's usually on city-owned airports. Nome's airport is owned by the state. Council member Jerald Brown said there are enough city services at the airport to merit the tax.
"I've seen the fire trucks responding to issues at the airport, I've seen police responding to issues at the airport. I know there's water and sewer provided out there, probably for a fee, so services are being provided," he said.
Brown called for a list of other cities that assess property tax on airplanes, and a list of what entity owns the airport in those communities. when the proposal comes up for second reading and formal public comment at the next council meeting Dec. 8.
Also at the meeting, council members approved a $7 million bid by Orion Marine Contractors for the port's middle dock project.
This article originally appeared on KNOM Radio Mission, a Nome-based radio station sharing stories from around Western Alaska. It is republished here with permission.