The Kodiak City Council wants to allocate more of its sales tax revenue to fund capital improvement projects, such as road repairs. Council members took up the issue at a regular meeting Thursday night, Feb. 8. KMXT’s Davis Hovey reports:
According to city documents, the amount of money generated by local sales tax in Kodiak has increased over the last three years at an average of six percent – even though the actual tax has stayed at the same rate of 7%. That means $14,605,837.25 is going into the city’s coffers annually from sales tax alone. Based on the latest numbers from fiscal year 2023, the city could be taking in $33,638,844.12 but due to the large number of sales tax exemptions the city grants, sales tax revenue is half that amount.
City code caps how much of that money could go towards road improvements at just $500,000. But a proposed ordinance on the council’s agenda Thursday night would raise the cap by $1 million.
City Manager Mike Tvenge says that due to rising inflation costs and the addition of new sales tax revenue in recent years, the current code – which was passed nearly two decades ago – needs to be updated.
“The City had reached a point where revenues needed to be increased or services needed to be cut. This was back in 2006. At the time, changes to the city code were recommended to sections that dedicated general fund revenues for a specific purpose; again, roads, ports and harbors. And the amounts were decreased to $500,000 respectively,” Tvenge explained.
Similarly, the proposed amendments would allocate up to $1.5 million of sales tax revenue to the port and harbors fund that is solely used for harbor capital improvements, rather than directly taking out more from the ports and harbors fund or pulling that money from the general fund later on.
Two-thirds of this pot of sales tax revenue would be allocated for port and harbor infrastructure maintenance, repair, replacement and capital equipment. While the other third of $500,000 would be allocated to the shipyard.
Although the city’s sales tax revenue is going up, costs for capital improvement projects are also rising. That requires a larger amount of the city’s general funds to cover the road, ports and harbor, and other capital improvement funds. Councilmember Charles Davidson questioned what a separate allocation for Kodiak’s shipyard would be used for.
“Typically it will be for capital improvements or operations too,” Tvenge responded. “And as we just had the audit report a couple days ago, we noted a $400,000 loss at the shipyard and this would help alleviate that as well.”
The council voted to move the ordinance amending the cap on sales tax allocations forward to the next regular meeting, where it could be officially passed.
Before adjourning the meeting, the council appointed a new Kodiak High School student member to the Parks and Recreation Advisory Board with a term expiring at the end of this school year on May 31, and Coast Guard CWO-2 James Ferguson to the Port and Harbors Advisory Board with a term expiring at the end of this calendar year, Dec. 31 2024.
The Kodiak City Council also decided to cancel their next regular meeting on Feb. 22 since four council members will be traveling during that time, mainly for the winter Alaska Municipal League conference in Juneau.
Instead, the council is expected to hold a special meeting later this month.