City council to discuss possible taxes to fill out FY18 operating budget

Council and school board joint work session begins at 6 p.m. Wednesday, followed by council meeting at 7 p.m.

A work session and city council meeting are scheduled for 6 p.m. and 7 p.m., respectively, Wednesday, Oct. 18, in city council chambers at the Cordova Center.

The work session is a joint meeting between city council and Cordova school board, to discuss the school’s budget and the city’s FY18 budget.

The meetings are open to the public.

In addition to staff quarterly reports, several revenue items are up for council discussion including a motor fuel excise tax, a summer/winter city sales tax split, a single sales tax cap, and the discontinuation of the compensatory collection discount applied to business owners who file and pay city sales taxes on time to the city.

Fuel tax

Under consideration is ordinance 1156, a motor vehicle fuel excise tax, with various scenarios on the table: A 2 cents per gallon tax would raise approximately $88,000; a 3 cent per gallon tax would raise approximately $132,000; and a 4 cent per gallon tax would raise approximately $176,000.

It is up to council to come to a consensus on which tax they will approve for reading, if any, at the meeting.

Seasonal sales tax

Sales tax ordinance 1158 is next on the agenda, and if passed, will increase city sales tax from April 1 through Sept. 30, and decrease sales tax Oct. 1 through March 31. Currently, city sales tax is 6 cents on the dollar year around.

Three options are before council in this ordinance: Spitting the sales tax rate to a seasonal 8/4, raising approximately $300,000; splitting the sales tax rate to a seasonal 7/6, raising approximately $320,000; or splitting the sales tax rate to a seasonal 8/5, raising approximately $470,000.

Sales tax cap

Ordinance 1159 is also under consideration by council, to establish a single sales-sales tax cap on purchases. Options are a single sales cap of $5,000, raising approximately $100,000; a single sales cap of $7,500, raising approximately $125,000; or completely eliminating the single sales cap, raising approximately $225,000, according to the city.

On-time sales tax discount

Ordinance 1160 addresses the compensatory collection discount received by city businesses that collect, report and timely file/pay quarterly sales tax receipts with the city.

The elimination of the compensatory collection discount could potentially raise $30,000, according to city manager Alan Lanning, who drafted the above ordinances and their numerous options.

In a city council communication form included in the Oct. 18 meeting agenda, Lanning said considerable discussion focused on arriving at the nexus of personnel vs. operational costs during the strategic planning process, at which city council and management agreed to a plan to bring the city’s budget up to the overall revenue need of an additional $620,000 by 2020.

“At this point in time, that nexus cannot be achieved without additional revenue or extremely radical cuts,” Lanning wrote. “Cuts, which in my professional opinion, would severely limit our ability to provide quality services to the city. I would like to reiterate, this is the general fund only. The strategic plan was the culmination of eight special meetings, specifically focused on strategic planning and economic sustainability. It is intended for the city to reach expense and revenue parity, no later than 2020, without complete reliance upon either state or federal funding.”

Presently, the draft FY18 city operating budget is in the red by $367,000, according to Lanning.

The ordinances, if accepted, will have their first reading during the council meeting Oct. 18. Two readings, passed by council, are required. If the ordinances are passed, they will go into effect with the FY2018 budget Jan. 1. Alternatively, council can reject or alter the ordinances as they are presented in the Oct. 18 agenda.

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Cinthia Gibbens-Stimson is a staff writer and photographer for The Cordova Times. She has been writing in one form or another for 30-plus years and has had a longstanding relationship with The Cordova Times starting in 1989. She's been an Alaskan since 1976 and first moved to Cordova in 1978. She's lived in various West Texas towns; in Denver, Colorado; in McGrath, Cordova, Galena, Kodiak, Wasilla, Anchorage and Fairbanks, Alaska and in Bangalore, India. She has two children and three grandchildren. She can be reached at cgibbens-stimson@thecordovatimes.com or follow her on Instagram @alaskatoindia.