CBJ finance committee meets

    Juneau, Alaska (KINY) The CBJ Finance Committee spoke on a variety of sales and property tax exemptions at their regular meeting Wednesday.

    Finance Director Bob Bartholomew said there was a request for a change to the export manufacturing personal property tax exemption first established in 1992.  Only two businesses received the exemption in 2017.

    The exemption depends on the value and percentage of goods sold and exported in the previous year and the number of full time employees employed by the business during the previous year.

    He explained the goal was to generate local economic activity based on the manufacturing of goods exported in Juneau.  The tax exemption is limited to five years and is based on a sliding scale from 100 percent to 20 percent.

    The state amended the law to take away the five year limitation and left that up to local government.  The law said governments can not exempt manufacturers from taxes for public education.  That amounts to 2.65 mills.

    Assembly member Rob Edwardson asked what benefit residents here have seen because of the exemptions.  Bartholomew said he did not have a direct answer.  He explained that Juneau and Alaska as a whole has a much smaller manufacturing base due to logistics and location.  "If we can either motivate people to do something they wouldn't otherwise do or provide them a financial benefit for doing it, that was the purpose and intent."
    He noted he hasn't asked businesses that receive the exemption if the tax exemption had any impact on their plan for growth.

    Assembly member Jerry Nankervis said he made the request to review the ordinance.  He said he thought lowering the tax exemption when a company increases employees didn't make sense.  "I don't think since you have been successful and put more people to work that the exemption should go away."

    In 2018, Alaska Glacier Seafood and Alaska Brewery received applications for the exemption.  Companies with under 50 employees receive 100 percent, those with 50 to 99 receive 80 percent, up to 149 employees receive 60 percent, up to 199 employees 40 percent, and between 200 and 499 employees 20 percent.
    Chairman Jesse Kiehl said helping start up and small businesses is a positive thing.  He said the CBJ should keep the current regulation.
    Mayor Ken Koelsch said Juneau is willing to support and look at things that help Alaskan Brewing in order to keep them here.  He said the Mayor of Olympia, Washington, once visited the brewery and tried to lure the operation there.

    Several assembly members requested staff review an exemption provided non profits who conduct retail sales.  In 2017 non profits purchased over $27.4 million in goods that were exempt from the five cent sales tax.  That increased from $23.8 million in 2016.   There are 174 organizations that must file with the CBJ.  79 of these had retail sales activity.  The activities offered by the non profits include services, retail sales, entertainment, classes and or camps, and fundraising.  Sales by non profit organizations totaled just over $13 million in 2017 an increase from $10.7 million in 2016.

    Mr. Nankervis said he wanted to level the playing field for the retail sales.  He said his goal was to try and figure out how much sales are done by non profits.  "This is a thorny issue trying to catch things you want to catch and not everything in the water."
    He gave the example of sales of art in Juneau.  He noted art is taxed by a business and not if  its purchased at a non profit.
    Mr. Bartholomew said an all or nothing tax policy for non profits is much simpler.  "As soon as you go down the exemption path you are picking winners and losers."

    Edwardson said the whole purpose of non profits is to provide services the CBJ doesn't provide.  He said he was not interested in pursuing a change in the non profit retail sales exemption from sales taxes.

    The committee also referred an ordinance to the full assembly that would increase the fiscal year 2018 budget by $661,700.  This includes a shortfall in the Fire Department budget of $384,200 due to ambulance billing being less than expected.  Parks and Recreation exceeded its spending authority by $195,000.  A shortfall in revenue expected from the pools, Centennial Hall and parks/landscape and maintenance exceeded expenditure authority.  Most of the $661,700 will come from an increase in sales tax revenues.

    Manager Rorie Watt said he was not happy about the supplemental request.  He said the biggest issue was timing.  "Most of the need is driven by revenue projection problems, revenue not materializing, it is not expenditure driven.  It really should have come to light sooner so the assembly could have more time to react and the departments more time to adjust."

    Mr. Bartholomew said overall the city spent less than budgeted.  He noted the city departments have done a good job cutting costs.  He said fire rescue estimated a 17-percent increase in medical reimbursement for ambulance calls but collected about the same revenue.   They estimated revenue of $2.3 million and received roughly $2 million.  Ambulance calls continue to increase in the borough.  Part of the reason for less revenue could be the state holding back medicaid revenue in May and June.  Often times it can take several months to collect on these bills.


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