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City Council Mulls ‘Sin Taxes’ to Balance Books

Nome in 2002. Photo: Sir Mildred Pierce via Creative Commons.

Facing increasing budget strain, the Nome City Council is turning to sin taxes for relief.

Fresh from delivering more than $2 million to Nome’s schools—hundreds of thousands of dollars more than what the council had initially wanted to spend—the Nome City Council met for a noon budget work session Tuesday to hash out a draft budget that relies heavily on assumptions of new revenue.

The new budget would assume a five percent tax for utilities (up from four percent), and also assumes a new eight percent tax on alcohol and cigarettes. The council further wants to look at taxing personal property like aircraft, though that oft-floated idea showed little sign of advancing at the meeting.

Any tax on tobacco or alcohol would have to go before voters before it starts generating money for the city; if voters rejected the tax, by the city’s calculations, it could leave their budget $550,000 short.

With about $1.3 million dollars in city savings at the beginning of the year, the current draft budget would call for using just over $240,000 of that savings to balance the city’s books, even if all hoped-for taxes are implemented and collected.

It’s a precarious financial situation that’s pushing council members like Stan Anderson to once again go through the budget and look for anything to trim.

“I don’t want to take any money out of savings,” Anderson told the assembled council members, “so I have to go through this budget and find a certain amount of money. I’m going to make amendments to this budget, but I need to know …”

“How much to cut?” city finance director Julie Liew said.

“Right,” Anderson replied.

The council will pick the budget clean before reviewing at their next meeting on Tuesday, June 10.

In addition to the work session, the council took care of some official business, awarding the general contracting and construction management bid for the Richard Foster Building—the future home for the city museum and library, and Kawerak’s Beringia museum—to ASRC SKW Eskimos, Inc.

Despite some confusion on the numbers, the council unanimously approved the bid for a total cost of just over $12.1 million; a cost that’s already been budgeted for.