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Government

Unalaska Voters Will Decide Sales Tax Increase To Offset Rising Utility Costs

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Unalaska voters will get the chance to weigh-in on a proposed sales tax increase in October. 

The Unalaska City Council agreed Tuesday to put it on the ballot for the upcoming Municipal Election. It's an attempt to fight rising utility bills. 

Revenues raised by the proposed 1.5% tax increase would go into a fund to subsidize utility costs, which increased after two programs that augmented utility costs ended.

"We kind of got hit by a trifecta here," said council member Shari Coleman. "One, we're not subsidizing wastewater anymore, like we were. Two, [Power Cost Equalization] went away. And three, our rates went up, because we all said it needed to go up." 

Utilities in rural Alaska towns and villages can cost up to five times more than in urban areas. Earlier this year, the governor's office emptied funds for the Power Cost Equalization program, which paid to offset the power costs for rural Alaska. 

The fund's fate is uncertain — the Alaska legislature is set to discuss it during an upcoming special session, and the Dunleavy administration is expected to challenge a judge's ruling that would protect the PCE.

August is the first month in 20 years that the PCE credit was not applied to utility bills in Unalaska.

"What we have been seeing is an artificial decrease in our utilities, actually. Now we get to see what it really is," Coleman said.

City officials say the new sales tax would lower the overall amount of money Unalaska ratepayers spend by spreading the burden to non-residents.

Vice Mayor Dennis Robinson said roughly 40% of the city's sales tax comes from marine fuel sales.

"Those are folks that come up here and fish, utilize our infrastructure … and then they leave," he said. 

Robinson also said Aleutians West Borough shoulders the burden when out-of-state workers apply for unemployment after spending a season fishing here. 

"It's an extreme blow to any economy when an economy cannot hold onto some of the money, to keep the money home," he said.

Unalaska's current sales tax of 3% is lower than many cities around the state. Kodiak, Kotzebue, Homer and Bethel all have a general sales tax rate of 6% or higher. 

But the cost of living in Unalaska ranks among the highest in the nation, and utility cost increases are set to bring that number even higher.

The Unalaska City Council authorized rate increases in May, but city officials say it didn't raise enough money for public utilities. 

Robinson warned that utility costs will continue to grow because the city has growing infrastructure and utility needs. 

"In the very near future we are going to be faced with putting secondary sewer treatment in, in place of what we have now," Robinson said. "And that's gonna be another blow and it's going to affect the taxpayers directly in utility bills."

Coleman voiced concern about Unalaska's future.

"We don't want to drive residents out of here. I don't know how people can [afford] some of these rates, especially if you're on a fixed income, how you can stay here with the way it is now," she said.

Unalaska's Municipal Election is on Oct. 5.

 

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