As budget deficit looms, Juneau Assembly eyes tax breaks

Gladi Kulp senior sales tax exemption

Gladi Kulp shows her senior tax exemption card at IGA. She says she normally doesn’t use it for small purchases, but her cashier knows her and prompted her for the card number. She saved about 85 cents this trip. (Photo by Jeremy Hsieh/KTOO)

With another year of multimillion dollar budget deficits on the horizon for the City and Borough of Juneau, an Assembly committee is reviewing the city’s 37 sales and property tax exemptions.

The committee will recommend which ones to keep, adjust or throw out.

Through sales tax exemptions in 2013, the city gave up nearly $78 million in revenue that could have paid for city services like education, libraries, police and fire protection, road maintenance and parks.

Assembly members on the committee are well aware that this is the hard part of being in elected office.

“If we make any changes that are going to cost anybody any more money, they’re not going to be popular,” Assemblyman Jerry Nankervis said at the committee’s first meeting last week.

After a long pause, Assemblywoman Kate Troll pointed out, “This is not a popularity committee,” which lead to hearty laughter from the committee.

With no changes, the city predicts it will be about $7 million short in the next budget year. The committee and city finance staff agreed that tightening exemptions on big-ticket goods and services is a good idea. Right now, the sales tax paid on a single good or service is typically capped at $375.

“Well, I definitely agree the cap is a good one,” said Sales Tax Administrator Clinton Singletary. “It hasn’t been adjusted since ’91, so it’s been awhile.”

Those caps saved taxpayers more than $5 million last year.

The senior citizens’ sales tax exemption is also under review and bound to be more controversial.

Assemblywoman Kate Troll says she’s interested in scaling it back so wealthier seniors no longer qualify. She also wants to create a new exemption on unprepared foods.

“That would benefit a larger cross section of Juneau. And, actually, people that probably are more deserving or needing of that exemption on food than some of our well paid seniors,” Troll said.

Senior citizens saved almost $2.9 million through the tax break last year.

Both the number of senior sales tax exemption cards issued and the dollar value of untaxed sales have grown steadily since at least 2006, according to finance department figures.

That lines up with a graying trend in Juneau demographics. The Alaska Department of Labor & Workforce Development projects Juneau’s 65 and older population will grow much faster than the overall population in the coming decades.

The tax exemption review committee meets again Aug. 7. Its report is due to the full Assembly by the new year. Similar tax exemption reviews were last completed in 2005 and 2006.

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