City and Borough of Juneau
Assembly Finance Committee Meeting
Monday, December 13, 2010
Immediately Following the Committee of the Whole Meeting
Assembly Chambers

I. Call to Order

II. Roll Call

III. Approval of Minutes
December 1, 2010 (pp. 4)

IV. Juneau Homeless Respite Care Pilot Program (pp. 5 - 14)
The Juneau Homeless Coalition has identified the need to provide respite care for homeless persons who are too ill or frail to recover from a physical illness or injury on the streets but who are not ill enough to be hospitalized.

Included in your packet is a document from the Juneau Homeless Coalition that describes the existing need, costs, what actions are being taken to set up a framework for respite care and the process that will be used to identify and assist individuals needing respite care for the pilot program.

Professional services and food are being donated to the program by the Glory Hole, JEDC, Hospice and Home Care nurses and the Front Street Clinic. The out-of-pocket cost of the program is estimated at $10,800 of which BRH has pledged $5,000. The Juneau Homeless Coalition is requesting that the CBJ provide the remaining $5,800.

Mr. Scott Ciambor, Affordable Housing Coordinator and Co-Chair of the Juneau Homeless Coalition, will present the request.

V. Ordinance 2010-32 – An Ordinance Amending the Sales Tax Code to Remove the Single Item Cap on Jewelry Purchases (pp. 15 - 18)
At the November 8, 2010 Assembly meeting, Ordinance 2010-32 was voted down. However, Mayor Botelho gave notice of reconsideration. At the November 29, 2010 Assembly meeting, Mr. Sanford made a motion to reconsider Ordinance 2010-32 and requested that this ordinance be forwarded to the Assembly Finance Committee. Mr. Anderson made a motion to split Mr. Sanford’s motion. Mr. Anderson’s motion passed. The motion to refer the ordinance to the AFC passed.

The question before the AFC is to narrow the existing $7,500 single item (for tangible items) sales tax exemption to exclude jewelry. The current code (69.05.040 (21)) exempting sales tax on a single item is very broad and applies to all tangible single items above $7,500, plus fuel oil above 50,000 gallons. The exemption reads as follows:

That part of a selling price of a single item that exceeds $7,500. For the purpose of this subsection, a single item is:
(a) An item sold in a single sale consisting of integrated and interdependent component parts affixed of fitted to one another in such a manner as to produce a functional whole; or
(b) A single delivery of fuel oil in excess of 50,000 gallons delivered by marine transportation to a single customer.

The single item sales tax cap was originally adopted in May 1983 to avoid providing an incentive for residents to purchase high tickets items outside of Juneau. The need for the exemption was directed to the first 3% temporary sales tax question being placed before the voters. The cap was originally set at $5,000 and this was considered an acceptable taxation limit to not provide an incentive to purchase cars, boats, equipment, etc. from outside of Juneau.

In June 1991, the cap on the sale of a single item was increased from $5,000 to $7,500. The change was intended to increase sales tax revenues for the City and Borough of Juneau without giving local purchasers significant increased motivation to look outside Juneau for large ticket purchases. Local merchants offered no objection to this change.

The code was later modified, at the request of local merchants, to avoid providing an incentive for the local mines to purchase fuel oil outside of Juneau.

The current code 69.05.040 (21) exempting sales tax on a single item of goods is very broad and applies to all tangible single items above $7,500. The exemption reads as follows:

That part of a selling price of a single item that exceeds $7,500. For the purpose of this subsection, a single item is:
(c) An item sold in a single sale consisting of integrated and interdependent component parts affixed of fitted to one another in such a manner as to produce a functional whole; or
(d) A single delivery of fuel oil in excess of 50,000 gallons delivered by marine transportation to a single customer.

The table below shows, by quarter, those jewelry sales that were exempted for calendar years 2006 through 2010 (the 4th quarter of 2010 is not yet available):

Year

1st Quarter

2nd Quarter
3rd Quarter
4th Quarter
Totals
2006

$          8,081

346,540

1,083,451

4,890

1,442,962

2007
 

428,302

1,798,652

1,290

2,228,243

2008

19,625

423,266

1,713,414

 

2,156,305

2009
 

456,184

1,836,989

 

2,293,173

2010
 

1,619,456

1,936,890

 

3,556,345

Totals

$       27,706

3,273,748

8,369,395

6,180

11,677,028

Average Sales

$         5,541

654,750

1,673,880

1,236

2,333,400

Average Annual Sales Tax Exempted    

$   116,700

It should be noted that the current code does include a number of specific, by item, exemptions to the sales tax exemptions. Examples include:
1. The $7,500 sales tax cap was expanded include the sales of fuel oil (delivered by marine transport) above 50,000 gallons. The single item cap would not normally apply under the single item exemption since each gallon of fuel is considered a separate item.
2. Sales of alcoholic beverages to senior citizens are subject to sales tax while all other goods and services are exempt. (69.05.040 (18))
3. Sales of lobbying services performed by lobbyists who are regulated by applicable state statutes and regulations are exempted. (69.05.040 (35))
4. Sales of aviation fuel and aviation fuel delivery services at the Juneau International Airport. (69.05.040 (28))
5. Sales of building or construction services under specific conditions. (69.05.040 (5))

Supplemental information included in the packet:
1. Ordinance 2010-32 as voted on by the Assembly at its November 29, 2010 meeting.
2. Memo from Joan Roomsburg, Sales Tax Administrator, dated September 16, 2010, regarding the single item cap

Mr. David Stone, AFC Chair, has agreed to accept public testimony on this item.

VI. Adjournment