City looks to identify more revenue

The Nome Common Council and City administration have shouldered the annual burden of finding revenue to balance a budget to pay for City services, and decrease the pull-down on the City’s general fund reserve..
Earlier this month, the Council in a work session started reviewing Nome’s tax code to find more revenue for FY 2020-2021, and at the same time consider the wishes of taxpayers of real property, personal property and sales taxes.

First things first
Should the Council jump into the usual annually considered details one-by-one in funding the 2020-2021 spending year, or from the top analyze plans and objectives to be funded?
“Perhaps we can look at what our goal is first and then talk about the process by which we’re going to get to that goal and, and review and rewrite the ordinance rather than just diving right into the specifics,” Glenn Steckman, recently hired city manager, said.
The Council went along. When the community interviewed Steckman and two other candidates for city manager, Steckman had made it clear that he favored going after budgets beginning with goals and objectives.
The Council by law cannot vote and make formal decisions during work sessions but can reach consensus on business to consider in legally noticed, formal regular meeting agendas where they can pass resolutions or adopt ordinances. However, they did seem to reach consensus on several issues about which they intend to hold work sessions for further consideration.
They discussed personal property tax. Should they extend the tax burden to cover certain items or drop some, or should the City drop the personal property tax, the value of which is about $40,000?
 “I’ve seen, most frankly, most of the organizations that I have worked with, have done away with a personal property tax,” said Steckman. “Because a lot of the problem is, [reporting] is on the honor system, unless you’re going to bring somebody—a firm—to come in and go business by business to look at their assets and put a value on them.”
Steckman offered that other municipalities found “nuisance” taxes to fill the hole left by canceling personal property tax.
The City perhaps would be able to regain some revenue from online taxation of off-site sales, like Amazon, for example.
Council has debated the issue before. Owners’ reports of personal property worth has not been backed up by inspections, leading to a wondering if this tax category was worth the trouble. How about airplanes—for many years exempt—from personal property tax continue to be tax free, or should personal airplanes used for subsistence hunting continue to be exempt?
After discussion, the Council had settled a consensus on dropping personal property tax altogether on non-business property effective Jan. 1, 2021, but continue to tax business property—equipment, furniture, technology, machinery, consignment goods. Notably, personal use airplanes would continue to be exempt, but the City would look into how to tax airplanes used commercially.
One method would not do, someone commented— taxing all planes on the ground on a certain day, say Dec. 31. That would produce an empty airfield and airport, on that day, Ken Hughes, planning commissioner commented from the audience. Instead, there could be a formula created for how long an airplane were on the ground, how many landings or some such scale.
Councilman Jerald Brown brought up a new topic—new at the meeting but an issue discussed many times previously and shot down—an excise tax on alcohol. State law forbids targeting a commodity for excise tax, but coupled with another item—marijuana or tobacco or both, the tax would be legal.
“If you look at the police blotter and police chief reports for the past 15 years, the number of calls and expenditures is a high percentage,” Brown said, adding that the “cost to the City along with ambulance calls no one pays for came to millions of dollars.”
The measure would increase revenue and increase the burden on young consumers and attempt to hinder irresponsible consumers. On a five-year average, liquor sales pull sales tax revenue of $269,472 per year.
Hughes opined the excise tax would not affect teen use, but instead would “take food off the table,” as people would be willing to pay the higher prices.
Documents presented in the past did not support this idea, Brown said.
Another idea brought forth was to use this year’s NSEDC Community Benefit Share—$200,000— for an overall community need rather than divvy it up among the nonprofit organizations. For example, as in the first three or four years, the share went to the swimming pool at the Nome-Beltz Complex. Someone on the Council suggested that the $200,000 go to the Nome Rec Center.
An idea for pull-tabs followed—the concept that the City would take less tax off pull-tabs allowing more money to the nonprofits to fund themselves. The suggestion was to stop taxing gross sales and instead tax the ideal net.
“If we let the nonprofits cover themselves, we could replace the [lower tax revenue] with the NSEDC money,” Councilman Mark Johnson said. The five-year annual average revenue for pull-tabs has been $371,347.
One problem, Brown pointed out. The pull-tab-selling nonprofits are fewer and not the same as the nonprofits funded in part by money from the NSEDC Community Benefit Share.
The Council and City administration will look at pull-tabs as a separate issue.
Meanwhile, Bryant Hammond, city clerk, would be working on an ordinance spelling out new thinking on personal property tax, dropping personal property from tax liability and keeping commercial items, and adding airplanes being used commercially.
The Council intends to discuss and refine thinking on these revenue issues in additional work sessions after the first of the year. The Dec. 23 regular Council meeting was canceled.

The Nome Nugget

PO Box 610
Nome, Alaska 99762
USA

Phone: (907) 443-5235
Fax: (907) 443-5112

www.nomenugget.net

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