Wasilla approves $10K to fund online sales tax research
The City of Wasilla will fund research on whether an online sales tax would work for the community.
At Monday night's Wasilla City Council meeting, members voted 4-2 to approve $10,000 in funding.
Just two people showed up for Monday's public comment period on the issue. They came with more questions than opinions.
"If you implement this sales tax, will you reduce the sales tax we get charged within the city?" asked Joe Schlanger.
The city's finance director, Troy Tankersley, proposed the ordinance to help answer questions that will come up as officials mull an online sales tax.
"What changes do we need to make to our code? What are we giving up? We're not asking for a new tax, we're just answering questions," Tankersley said.
The money will go to the Alaska Municipal League (AML), which is conducting an estimated $100,000 in research regarding the question on behalf of municipalities around the state. Only municipalities that currently have a sales tax can participate, which means the Municipality of Anchorage is not eligible to contribute funding for the study.
AML Executive Director Nils Andreassen called in to give information to the council. He said there are 100 communities around the state that collect a sales tax. So far Juneau, Ketchikan, Soldotna and Bethel have given funding to the research too.
"I think it's important to note an online sales tax isn't a new tax," Andreassen said. "It's the existing sales tax each jurisdiction already has on its books but it hasn't been implemented by online retailers until this year. Already we're seeing Amazon implementing the sales taxes that jurisdictions have."
Tankersley said the research will answer the basic questions people have about how the tax would be capped and how much money it would bring in.
"The municipalities around the state of Alaska have many different codes when we talk about sales tax. For one municipality to fund those resources to answer all those questions would be expensive," Tankersley said.
Wasilla currently has a 3 percent sales tax, a third of which goes to its police department. The remainder brings in about $14 million a year, Tankersley said, which goes into the city's general fund.
The AML research project comes after the Supreme Court's decision last year in the Wayfair case, which allows cities to collect an online tax from companies that do not have brick-and-mortar stores in their jurisdictions.
"(It's) as if Amazon existed inside our city limits," Tankersley explained.
Tankersley called the requested $10,000 fairly inexpensive, thanks to the league's pooled funding for the research. Doing so on his own would involve much higher spending on legal fees to answer the same questions.
The proposal has drawn online criticism, with some people opposed to spending the money to study an online tax. Tankersley said the tax, which would bring in more money for the city's general fund and services to the public, also addresses a question of fairness for local businesses.
On Monday council member Tim Burney was fired up in opposition to the proposal, saying the city has enough money to meet its needs.
"We have plenty of money for trucks, we have plenty of money for computer equipment, we have plenty of money to pay our employees a very handsome salary," he said while pounding his fist on the desk. "And all we're going to do is take another nibble. Another nibble from the taxpayer and another one."
Burney, along with Deputy Mayor James Harvey, voted against the measure.
Other council members were more in favor and said a tax seemed to be inevitable, so Wasilla should look at the possibilities now.
"For a city that depends on sales tax for everything, our infrastructure, snow removal, then I think we definitely need a seat at the table," Glenda Ledford said.
Mayor Bert Cottle agreed Wasilla should pitch in to lead the way.
"This is one of the few times the state's not leading the drive. Anchorage isn't in this; Fairbanks isn't in this," he said. "I'd sooner be at the table now."
Tankersley said an online sales tax won't happen overnight. Depending on what the research finds, state and local codes would have to be amended which could take years.
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