City and Borough of Juneau
Assembly Finance Committee Meeting
Thursday, July 23, 2009 immediately following the Special Assembly Meeting, which immediately follows a 5:00 p.m. Human Resources Committee Meeting
Assembly Chambers


I. Call to Order

II. Roll Call

III. Approval of Minutes
      July 8, 2009 (pp.3-4)

V. National Counsel on Alcoholism and Drug Dependency (NCADD) (pp. 5-10)
On July 8, 2009, the National Council on Alcoholism and Drug Dependency (NCADD) presented recommendations to the Finance Committee for possible increases in the Tobacco Excise Tax rate. The Committee recommended that this question be brought back before the Finance Committee for further consideration. The CBJ has had a practice of placing tax rate measures before the voters for determination. If the Finance Committee wishes this item to be considered on this year’s October ballot, the ordinance placing this before the voters would need to be introduced and adopted no later than August 24, 2009. Draft ordinance language is included in the packet.

The CBJ currently levies an excise tax of $0.30 per pack of cigarettes and 12% on other tobacco products (OTP). NCADD recommended that the rate be increased to $1.00 per pack of cigarettes and 45% on OTP. In calendar year 2008, the CBJ collected $517,800 in tobacco excise tax revenues. Approximately $15,000 is charged annually against excise tax revenues for program administration. The following table breaks down the 2008 levy between packs of cigarettes and OTP.

Cigarettes
Packets Imported in 2008
1,490,000
Excise Tax @ $0.30 per pack
$447,000
Other Tobacco Products
Value of Imported OTP in 2008
$590,000
Excise Tax @ 12% of imported value
$70,800
     
Total Excise Tax Collections  
$517,800

The NCADD proposal would result in total excise revenues of $1,690,000 or a $1,173,000 increase. The NCADD information indicates that tobacco consumption/use would decline by approximately 4% with this increase in tax rates. This 4% reduction has been included in the total noted above.

The CBJ currently uses all of our tobacco excise tax revenues, excluding the program administration costs, to support BRH’s Rainforest Recover Center and for social service grants (SSAB).

FY10 Rainforest Recovery Center Support-    
Tobacco Excise Tax  
$  222,300
Alcohol Sales Tax  
705,300
General Fund Support  
195,400
Total Support  
$1,123,000
   
FY10 SSAB Grants-  
Tobacco Excise Tax  
$  273,600
Alcohol Sales Tax  
157,600
General Fund Support  
313,800
Total Support  
$  745,000

To off-set the $509,200 in general fund support for the Rainforest Recover Center and SSAB grants, a doubling in the excise tax rates ($0.60 and 24%) would be required.

The NCADD also recommended that the CBJ consider a floor tax to avoid merchants stockpiling tobacco product prior to an excise tax increase. The floor tax would be a one-time or one-day excise tax levy applied against the inventory previously taxed at the lower rate on the effect date of the new excise tax.

The NCADD also recommend some wording changes to the existing tobacco excise tax code. Staff is working with NCADD on the proposed wording changes and will bring these changes forward, as appropriate.

V. Gastineau Elementary $11,800,000 School General Obligation Bond (pp. 11-14)
On July 8, 2009 the Finance Committee approved moving forward with placing an $11.8 million bond proposal for Gastineau Elementary School on the October 2009 ballot. This bonding proposal should qualify for 70% reimbursement under the State’s School Construction Bond Debt Reimbursement Program. Enclosed in the packet is the draft ordinance containing the ballot language. The proposed purpose for the bond proceeds is contained on page 2 of the draft ordinance. The ballot language (explanation and question) is presented on pages 3 and 4. Staff will also have available for the meeting additional graphic information showing the mill levy impacts of our general obligation debt issues.

Additional information:

Mill Levy Graphs for:

GO Debt Service - All Issues, net of SCDR and Sales Tax

GO Debt Service - Nonschool Issues Only

GO Debt Service - School Issues Only, net of SCDR and Sales Tax

 

VI. Adjournment