Petersburg voters will decide this fall whether to raise the town’s sales tax cap.
Petersburg’s sales tax is 6%. Currently, sales and services are only taxed on the first $1,200, which means tax on a single purchase is capped at $72 max. Now, the Borough wants to raise that cap to $300 by changing the taxable amount to $5,000.
Borough officials say Petersburg has the lowest cap among major towns in Southeast Alaska. The cap has been adjusted only once since it was established nearly 70 years ago, raising it from $1,000 to $1,200 in 2002.
Petersburg’s Borough Assembly passed the proposal at a meeting on June 15 with a contested 4–2 vote. Assembly members Rob Schwartz and Scott Newman voted in opposition. Mayor Bob Lynn was absent from the meeting.
Assembly members on both sides of the vote said the change, if adopted, would affect local businesses.
“I understand that, you know, the Borough needs money to maintain things and infrastructure and all that,” said Newman. “I just feel like this is not the right move at this time.”
Newman said he believes local government should be “incentivizing business” instead of “taxing the ones that are supporting us.”
Assembly Member James Valentine agreed that raising the cap would impact businesses in town. But he said it doesn’t help to keep putting off changes like this that would generate money for the Borough.
“Eventually, the Band-Aid needs to be ripped off,” Valentine said. “I don’t think that just continuing to defer this really helps anything. I think that we need to move forward.”
He said he liked that the proposal will go before the voters to decide. It will be on the municipal ballot this October. The measure was previously on the 2024 ballot, but failed by five votes.
Electric utility department requests new bond
The Assembly also considered a different potential ballot measure for the first time at the June 15 meeting. It’s a proposal from the Borough’s electric utility department, requesting a $3.3 million revenue bond.
The department says the money is needed to help pay for a diesel generator project in Scow Bay to provide power when local loads are high or hydropower is lost.
The project started in 2022, but construction costs skyrocketed and, according to the Borough, that caused a “dramatic budget shortfall that would be funded through this bond.”
Vice Mayor Jeigh Stanton Gregor voiced support for the proposal.
“Stable electricity is critical infrastructure for our community,” he said. “Also, it’s the first reading. If members of the public would like to show up at the next meeting, that is the time of public hearing. The more feedback, the better, as always.”
The proposed bond would be repaid solely through revenues of the electric utility. In other words, money from local utility bills.
“Are we talking then a rate increase to cover this?” Assembly Member Jeff Meucci asked.
“No,” retiring Utility Director Karl Hagerman replied.
The Assembly recently agreed to increase Petersburg’s electric utility rates. But Hagerman said this proposed bond was already accounted for in the rate study, and approving the measure would not cause an additional increase.
The Assembly gave its initial approval unanimously. If it passes two more times, the proposed revenue bond will also be on the municipal ballot this fall for a final decision by Petersburg voters, alongside the sales tax cap question.
