Kodiak City Council Raises Sales Tax Cap

Mitch Borden/KMXT

At its regular meeting on Thursday night, the Kodiak city council heard testimony from community members on whether it should or shouldn’t raise the city’s sales tax cap from $750 to $3,000. And then voted on it.

For months, the Kodiak city council has been discussing raising the city’s maximum taxable sale, also known as a sales tax cap. At its regular meeting last night, it finally made a decision. The cap would be raised from $750 to $3,000. This means all sales up to $3,000 will be taxed and the highest amount of sales tax that can be charged on a purchase is around $200.

The city has a growing list of infrastructure projects it needs to take care of and a budget deficit of about $2.8 million. City manager Mike Tvenge ran through a list of the city’s needs that the revenue generated by the increased cap could help with.

“Our department directors have submitted lists of building repairs and replacement projects, water, sewer projects, harbor repairs and replacement, vehicles, and equipment replacement. All needed within the next ten years. We cannot afford to fund these needs with our current revenue. This is been deferred to a point and it’s hitting us all at once.”

The city estimates increasing the cap will generate an additional $5 million annually. Which would help with its capital projects and budget deficit.

The majority of community members who gave the council feedback on the issue at the meeting were against raising the cap. Alex Turner believes raising the cap will hurt Kodiak rather than help it.

“I just really hope you guys can see there’s nothing that’s gonna come good out of this, and just please listen. Please listen to us, this is not what we want.”

Increasing the cap wasn’t viewed negatively by everyone, though. Sarah Harrington told the council she trusts them to do the right thing and is happy to support the place she calls home.

“As a young member of the community, I want to pay more. I’m happy to live in this community. I’m lucky to live here. I love this town and I would gladly pay my fair share if you give me a chance.”

During the council’s discussion of the raise, Councilman Charlie Davidson told the audience he took no pleasure in voting for increasing the cap.

“Well, first of all, there’s not one person on this council that looks forward to seeing this ordinance pass but we’re also in the position to see the amount of decrease in the funding that supports our local government through the state and feds. And it’s a lot, a lot.”

The final tally of the vote to raise the sales tax cap was 5 to 1. Councilman Rich Walker voted against. He said the hike was too dramatic.  At the end of the meeting, Councilman Gabe Saravia said the council made the right decision even though some may not like it.

“As difficult to raise taxes. As difficult to do anything controversial. But at least [the] city council showed today that we do our job to maintain the quality of life in Kodiak.”

After raising the cap, the council also unanimously passed an ordinance making rent in Kodiak above $750 exempt from the city’s sales tax.