Variable sales tax creates a win-win for Seward

Published on January 20th, 2011 12:04 pm

By KEITH CAMPBELL

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How about paying little-to-nothing to retire the $3.73 million bond to finish our new Library Museum and having over one-third of the annual operating costs covered? Well, that is how the numbers work out if the Seward City Council selects the proposed variable sales tax rate for paying off the general obligation bond needed to pay for little over one-third of its total cost.

If adopted, the variable sales tax rate will change the current seven percent City sales tax rate to eight percent from April through September, and then drop the sales tax rate down to six percent from October through March (so half the year's tax rate would be lower than what we now pay).

This change will result in a likely zero increase in annual sales tax costs for year round residents. Although the rate will be one percent higher in the summer, it will be lower by two percent in the winter. The tax rate on higher winter costs like heating oil and utilities would be taxed at the lower six percent, making most people's overall annual sales tax cost lower. Hopefully our local merchants will benefit in the winter months, too, as we are encouraged to buy locally with the lower sales tax. Other Alaska communities, like Seldovia, have successfully used the variable sales tax method to their advantage.

Visitors will pay for virtually all of the costs of the Library Museum bond if the city council selects the variable sales tax option.

How? Well, tourists, and people who don't live in Seward pay an estimated 65 percent of all sales taxes collected in Seward during the summer months. Sales tax revenues go up dramatically in the summer, and because visitors will be paying the higher eight percent rate, the income to pay the Library Museum bonds will be paid by these visitors. The increased income for the City will not only cover the cost of the bond repayment, but will cover over one-third of the annual operating costs of the Library Museum.

Here's another way to think about this. The residents of Seward are getting a $10.3 million building for $3.73 million, and our non-resident visitors will pay the bulk of that amount. If this sounds too good to be true, don't take just my word for it. The City's web site agrees with this favorable analysis of the variable tax scenario and states: "This approach would keep year-round taxes at current levels for full-time residents of Seward when purchases are spread equally throughout all months of the year. The proposal could bring in approximately $348K per year. After bond payments this would leave approximately $99K per year for additional annual operating and personnel costs which are estimated to be around $250K."

I'm calling for all residents to write, call or email the city council and let them know that you support the variable sales tax as the way to finish funding the Library Museum. It's just that simple. Increasing property taxes, the other option under consideration by city council, puts the entire burden of the cost on local property owners and renters.

The Seward Library Museum project is a result of a community-wide planning process dating from 2003. Residents of Seward have been working for the last seven years to complete it. So far, we have raised $4.7 million from the State of Alaska and over $1.5 million in grants and Leadership Gifts. We continue raising funds to keep the bond amount to a minimum. While voters approved bonding $5 million of the costs last year, we are proud that amount will be well under the cap. Under the state grant agreement, we could be obligated to come up with a matching $4.7 million, but because of our fund raising, we are asking for a million less: $3.73 million. We continue a substantial fund raising campaign from grants and private resources.

We are not talking about building just a new Library. We're talking about combining the old library and museum. We're building a facility that is energy efficient, ADA accessible, sustainable and able to hold our history for another 100 years. We're creating a place for our children and adults to have access to information and education that will bridge what sociologists are describing as the "digital divide" in our school systems and society.

Libraries do have dollar values and benefits. Two sets of benefits—direct and indirect—flow from public library services. Studies show that a public library:

• Attracts new businesses to the community;

• Attracts patronage to local businesses,

• Improves overall quality of life;

• Increases local property values;

• Helps people find or train for new jobs;

• Nurtures a love of reading (important to educational success);

• Helps improve or start businesses, and

• Contributes to life-long learning.

So let's get out to the city council meeting on Jan. 24 to tell the Seward City Council that we support the variable seasonal sales tax proposal. You won't be alone. Since 2002, when the Spirit of Seward (SOS) initiative started, we have shown an overwhelming community support for this new building, as "Something for us all." When polled in 2009 an astounding nine out of 10 Seward residents indicated they were in favor of the new library museum. And just last year, voters approved the sale of up to $5 million on bonds to finish this project.

Thank you for your support in the past. We're asking for it again and we'll probably be asking again in the future as we get the final pieces of our new library museum nailed into place. I hope to see you on Jan. 24.

Keith Campbell is president of the Seward Library Museum Building Committee.


KEITH CAMPBELL can be reached at critchie@alaskanewspapers.com, or by phone at 907-224-3972

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