A committee looking at possible changes for the collection of sales tax in Petersburg on Friday heard from local senior citizens interested in keeping the senior exemption. Officials are expecting the percentage of the local population that qualifies for the over-65 exemption to grow in the next few decades, which could impact sales tax revenue. However, the committee did not come to any agreement on recommending an end to the senior exemption.
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Residents 65 and over qualify for a sales tax free card with the borough. Some 479 seniors currently have those cards and do not have to pay the borough’s six percent tax on purchases. Local resident Harvey Gilliland called the exemption a great aid for seniors on a fixed income and didn’t want it to end.
Another senior, Jackie Morrison offered a compromise. “And I don’t wanna be a burden on the young kids, that they have to pay six percent and I don’t have to pay anything. Has it occurred to anybody or is it even a thought, that maybe we could all split it. That we could pay three percent and you young kids could pay three percent. That wouldn’t kill us. It wouldn’t do us any good but it wouldn’t kill us. And I appreciate you guys trying to figure out how to keep the city running.”
The committee also heard from Bob Nilsen who thought rising costs to live in Petersburg would force seniors to leave town. “I don’t worry about myself, I worry about a lot of other people that don’t have money. I have enough money I admit that. I know how people think I shouldn’t talk about this but the truth of it is, there’s a lot of poor people in this town. If you take this exemption away, it hurts ‘em.”
Besides removing the exemption altogether, the committee also heard arguments for a smaller change. Glorianne Wollen thought there were too many exemptions from sales tax and too much of a burden on people paying property tax. “I would just like to ask if maybe we’d consider looking at maybe only giving exemptions for things like food and fuel. Things that people that are really having trouble living here those are the things they really need is food and fuel or some of those kinds of things.”
Another idea was granting the exemption only to low income seniors. Committee chair Sue Flint read a letter submitted by assembly member John Hoag. “Speaking as an individual, it appears to me that given the projection that the number of seniors who qualify will double in the next 10 years, that continuing the exemption without any modification will be unfair to the rest of the community will be unfair to the rest of the community as too high a percentage of the population will be exempt from sales tax. Many of us who qualify for the exemption do not need it. I suggest that the exemption be modified to have a qualification of an income-based exemption for seniors.” Hoag suggested an annual tax return document could be used to apply with the borough for an income based exemption.
Committee members also talked about using Medicaid eligibility as a determining factor. John Murgas had trouble with an income based system for the exemption that would be a public issue at the checkout line. “If its something that’s based on Medicaid eligibility…um, we seniors have pride and it would be difficult to be standing in line and then hopefully being real quiet ‘I’m exempt,’ it would be like food stamps or something like that and I think that would be too humiliating to expect our seniors to have to do that.” Murgas thought the community should welcome with open arms any seniors who are willing to move here.
And another committee member, Lee Corrao wanted to keep in mind the impact that sales tax changes have on retail sales locally. “Because there are many people who opt to go to other communities because of the six percent that they can save by going somewhere else. And it does directly impact the bottom line which also directly impacts our ability to employ others, so on. There’s a trickle down effect as a result of that.” Corrao also thought the state projection of a growing senior population in the area was too high because of the inclusion of Kake residents. He did not think the percentage of Petersburg seniors would be doubling.
In fiscal year 2013, the community saw over 107 million dollars worth of sales. Of that, nearly 61 million dollars worth of sales was exempt. Committee member Fran Jones pointed out that total senior exemptions last fiscal year were only four million dollars worth of sales, much smaller than the impact from other exemptions. “Whereas some of these other ones like government, which I know we have to exempt because we’re required to by federal and state law, those were actually 16 million, Resale was almost seven million, out of town, almost 14 million and so on and so forth. Seniors were a small part.”
Meanwhile, finance director Jody Tow told the committee that the borough was above last year’s sales tax revenue amount at this time of year by 240-thousand dollars. “It does fluctuate quite a bit each year. I looked, I tried to pull a report together for businesses that are outside the borough, or outside service area one that have now been taxing, and it was about 55-thousand dollars of that. I think a lot of that was because it was such a great fishing year, but I don’t know.”
The committee has yet to vote on any recommendations for the borough assembly but plans to meet twice next month with that goal in mind. Any tax changes would go on the ballot this October.
