By Melinda Munson

Ordinance 23-19 passed the Skagway Borough Assembly Aug. 3, placing the issue of higher sales tax in front of voters in the 2023 October Regular Election. Just four months ago, the voting public denied a sales tax increase at April’s special election, voting 56% against (220 votes) and 44% in favor (73 votes) of a 1.5% rise.

The new question will read: “Shall the rate of sales tax collected upon sales made and services rendered in Skagway be increased from 5% to 6.25% for increased operational and infrastructural demands during the 2nd and 3rd quarters of each calendar year, April through September?”

The intent of the ordinance is to have the majority of sales tax dollars come from visitors during tourist season. 

Assemblymember Orion Hanson said the municipality would be “in line with the rest of Southeast Alaska” even at the previously proposed higher rate of 6.5%. Juneau and Sitka’s sales tax rate is 5%. Ketchikan went from 6.5% to 8% in April.

Assemblymember Deb Potter emphasized that the Aug. 3 assembly vote did not increase taxes.

“And just to remind everybody that we are not up here about to vote on increasing taxes,” she said. “We brought this to the voters in April. It didn’t pass, it was relatively close. …since that April vote, we’ve seen the busiest season that Skagway has ever experienced. And people might have a different take, or maybe they’ll vote it down again. But I see no reason not to bring it up to the voters again. Especially if it’s not costing us any money. It’s an already scheduled election.”

There was some tension in assembly chambers when Assemblymember Alex Weddell motioned to change the rate from 6.5% to 6%. All but Assemblymember Dan Henry voted in favor. Henry then motioned to amend the amendment from 6% to 6.25%

“The reduction from six-and-a-half to six is the most amateurish approach anyone could have,” Henry said. “…The subsidies that we are strapped with, that we need desperately to maintain and expand are going to be seriously jeopardized by the last amendment.” 

Wedell described her logic as a “professional” decision. “…we’ve already asked a question and gotten a pretty big no on it,” she said. And I think as you stated, we need this to go forward and having it be voted down again, six months later, after we asked the same question seems like the bigger risk than changing it slightly.” 

Assemblymember Sam Bass and Weddell voted no to the 6.25% increase which prevailed 4-2. Weddell was the sole no vote on the ordinance.

Resident Sharon Bolton spoke in support of the increase at the July 20 assembly meeting, hoping for the 6.5% rate. She mentioned the municipality’s bond payment of $1,800,000, school funding of $2,600,000, $947,000 for the clinic, as well as funding for the fire department, police department, library, museum, childcare subsidies “and a host of other things the people of Skagway say they want.”

“I fear that if this does not pass many things will need to be cut from the 2024 budget,” Bolton said. “That property tax will have to be raised and there may not be a tax holiday during winter months … the money has to come from somewhere.”

Mavis Hendriskson disagreed. “We cannot afford to have a sales tax higher than our neighbor,” she said. “We can tax our property owners … We want our businesses to be as successful as possible…”