Voters in Petersburg this October will be deciding the fate of a senior citizen exemption for sales tax along with creation of a new excise tax on cigarettes and tobacco. Petersburg’s borough assembly gave final approval to a raft of ballot questions that could bring in more money for the borough if voters approve.
It’s a problem that Petersburg and other communities in Alaska face – as the Baby Boomer generation hits retirement, a growing portion of the population will be seniors. That means a growing portion of the population will qualify for a senior exemption from the local six percent sales tax. Borough officials put together a committee last year to re-examine tax exemptions and look for ways to keep tax revenue level. That committee discussed the controversial idea of eliminating the senior exemption altogether, but couldn’t agree on recommending that change. Instead borough assembly members proposed sunsetting the exemption. People who qualified by the end of 2019 would continue to be tax exempt. After that no one else could apply. The sunsetting ballot question almost failed during an assembly vote last month. However, assembly member John Havrilek was unable to make his vote heard over the phone.
Havrilek appreciated a chance for reconsideration this month. “I was really trying to get this through and I had no idea you guys weren’t able to hear me so I appreciate you giving me this option.”
Meanwhile vice mayor Cindi Lagoudakis said she still had reservations about the proposal. She noted the arbitrary cut off date of 2019 “The other issue is that there’s a conflicting ordinance that may or may not get approved by the voters. So this may sunset. And the one that I’m referring to is the grocery and fuel ordinance., which if this applies and that also gets voted in, the grocery and fuel may potentially sunset in four years.”
Lagoudakis voted no, along with Bob Lynn. However with Havrilek at this meeting that sunsetting passed 4-2 in second reading. It passed in third and final reading with only Lagoudakis voting no.
That conflicting ballot measure that Lagoudakis mentioned was approved by a 6-0 vote. That would limit the senior exemption to groceries and home heating fuel. The assembly also unanimously passed the third reading of a one year residency requirement for the senior exemption. Likewise they supported a question on ending the exemption for Alaska residents outside of the Petersburg borough.
Other ballot questions don’t apply to the senior exemption. The vote was also unanimous on a ballot question that seeks to raise the overall sales tax cap on purchases from 12-hundred dollars up to 2000 dollars. That measure would mean an additional 48 dollars for the borough on purchases of 2000 dollars or more.
The assembly also supported sending a tobacco excise tax to local voters. That will raise the price of a pack of cigarettes two dollars or 45 percent of the wholesale cost of other tobacco or nicotine vapor products. Similar tobacco taxes are imposed in Juneau, Sitka, the Mat-Su borough, Anchorage and Fairbanks. All those questions now go to voters in October.