City and Borough of Juneau

Assembly Finance Committee Meeting

Wednesday, September 10, 2008 at 5:00 p.m.

 Assembly Chambers

 

I.     Call to Order

II.    Roll Call

III.   Approval of Minutes

June 5, 2008 (pp. 3-4)

IV.   Business Personal Property Tax Exemption (pp. 5-6)

On November 21, 2005, the Assembly approved an exemption, Ordinance 2005-38, for business personal property (BPP) assessments.  Ordinance 2005-38 increased the existing standard BPP assessment exemption from $2,000 to $20,000 starting with tax year 2006 (January 1, 2006), to $40,000 in 2007 (January 1, 2007) and to $60,000 in 2008 (January 1, 2008).  The ordinance included that language requires the exemption be reviewed for 2009.

 

“In 2009 the Assembly will evaluate the increased exemption amount to see if the exemption amount should be increased further.”

 

If the Assembly wishes to review and potential change the exemption for tax year 2009, an ordinance would need to be in place at the time properties values are assessed, January 1, 2009.

 

Enclosed in the packet is summary of the impacts of increasing the PBB exemption to $80,000 and to $100,000.  If increased, it would have the following merchant and financial impacts (assumptions are based on the 2008 tax rolls and 2009 Mill Levy) -

 

 

Exemption

# of Merchants fully Exempted

Property Taxes Exempted

Property Tax Decrease Per Merchant Exempted

$80,000

58

$61,800

$1,066

$100,000

52

$49,700

$   956

 

V.    Avalanche Forecast Program (pp. 7-10)

Included in your packet is a memo from Rod Swope, City Manager, outlining the proposed Avalanche Forecasting program including the required funding. 

 

VI.   AEL&P Request to Extend Sales Tax Exemption on COPA

AEL&P has brought it to our attention that the expiration date of the emergency Cost of Power Equalization (COPA) sales tax exemption will create a customer inconsistency.  By law, emergency appropriations are limited to 180 days.  Since the emergency appropriation, 2008-17, became effective on May 1, 2008; it will expire on October 28, 2008.  Since AEL&P bills its customers daily, but on a monthly cycle, the customers who will be billed from October 28 through October 31 (4 days), will only receive the exemption for 5 months.  AEL&P has indicated that they have approximately 600 customers who will be billed for the $0.029 (2.9 cents) per kilowatt COPA charger during these 4 days.  AEL&P has considered moving the billing date for these 600 customers forward to avoid this issue, but concluded that moving the billing period would create greater issues than loss of the sales tax exemption.

 

If the Assembly wishes to provide a 4-day extension of the exemption to close the gap, it will be necessary to introduce and adopt an ordinance by September 28.  

 

VII.  Information Item

Status of Sales Tax Revenue Collections

The following information was prepared in March 2008 and presented in the FY09 and FY10 Biennial Budget document. “Sales tax revenues grew from FY90 through FY96 and into early FY97 at a rate between 5% and 9% per year.  In the spring of 1997, we started to experience a significant flattening in our sales tax growth rate.  Between FY98 and FY03, the summer sales tax growth rate dropped to between 2% and 4% and winter was flat to slightly negative.  The summer quarter growth has been largely supported by increases in tourism.  In FY06, we started experiencing unexpected growth in our sales tax revenues.  The increase in sales tax (starting in the summer 2005) is attributed to –

 

 

 

Even with the weak national economy, we are projecting that sales tax growth will continue at a strong rate of approximately 5% per year through FY10.”

 

The Assembly has requested that we provide updates on our actual general sales tax revenue experience.  Actual revenue collections through June 30, 2008 have been consistent to slightly a head of our budgetary projections.  Our per percent projection for FY08 was $8,132,500.  Actual revenue is looking to end up in the range of $8,180,000 or very close to our March projections.  We will continue to watch our sales tax revenues closely.  Our next opportunity to provide a revenue update will be after mid November 2008.

 

(Note: Sales taxes are reported at the end of the month following the close of the quarter.  The sales tax information for the quarter July 1, 2008 through September 30, 2008 will not be submitted until the end of October 2008 and not fully complied until approximately mid November.)

 

VIII. Adjournment