Listen to the story:
Nearly a quarter of Petersburg’s residents are seniors, and the borough is losing out on sales tax, according to borough officials. That’s because the borough has a decades-old senior sales tax exemption. Now, the borough wants to limit that exemption to just low-income seniors to help make ends meet.
For over four decades, seniors in Petersburg have not had to pay the town’s sales tax, which is now 6%. When the senior sales tax exemption first started in 1981, only 6% of the population qualified. Now, 24% of residents are seniors.
“We are seeing a funding shortage,” Borough Finance Director Jody Tow said. “In order to fund the schools and things that have really upped their requests of funding because of State and other reasons, we need to do something besides just increase property tax.”
The senior sales tax exemption costs the borough about $450,000 a year in lost revenue. And the borough is desperately looking for new ways to make money to pay for the increased costs of services. Sales tax revenue is down from past years. The borough also lost Secure Rural Schools funding when the U.S. Congress didn’t renew it. That’s federal funding for communities near national forests that can’t develop their land.
And the school district has been asking the borough for a few million dollars a year since state funding has remained mostly flat.
Assembly member Bob Lynn said the borough’s tight budget situation could get worse.
“If the Secure Rural Schools funding at the federal level is not reauthorized, then we have a lot harder [time] trying to balance the budget and to provide money for the school,” he said. “We’re gonna have to look at what services can be cut, if the federal government doesn’t reauthorize that, that has a big hurt on us.”
The borough said it’s subsidizing more senior services than ever before. It owns and manages an assisted living facility that’s staffed 24/7. The borough included over $40,000 in the next fiscal year’s budget for a meal program that delivers free dinners to seniors.
Liz Bacom is on the board that helps run the meal program. She testified at the assembly meeting.
“Three-quarters of our meals are provided at no charge to our clients. Our recommended donation for a meal is $7 and people who do not qualify as a client are asked to pay $10,” Bacom said. “And just for some data, the average number of meals we serve are 1,027. And 95% of these meals are delivered, and the average price of preparing one meal is $15.”
Lynn said it’s adding up.
“The amount that we’re having to pay, or the upfront, you know, both for assisted living, and then also meals and other things for seniors, has significantly increased,” said Lynn.
Tow said that changing the sales tax exemption to just low-income seniors will be minimal work for the borough.
“The state of Alaska will do all of this vetting for us,” she said. “We don’t have to do that. So, all we’re going to have to do is see a letter from the senior that says, ‘Hey, I qualify for this’.”
Any change to the sales tax must go to a public vote. Assembly Member Donna Marsh said revenue from seniors who aren’t low-income could help the borough.
“We are grateful for the wisdom that our seniors bring and provide to our community,” said Marsh. “But I wonder if it’s a good idea to relook at that and present it to the voters to say, this is the numbers that we’re looking at, and if we limited it to those who have need, then it might make more sense.”
The Borough Assembly will hold a few public hearings before voting on whether or not to put the question on the October municipal ballot. The borough is also looking at raising revenue through charging customers higher rates for water, sewer, and electricity.
Editor’s Note (May 29, 2025): This story has been updated to clarify that meals through the Mountain View Food Services program are provided at no charge for the majority of senior clients, but a monetary donation is recommended. KFSK’s newsroom is committed to providing additional details relevant to senior sales tax exemptions as the story develops.
