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Tax mill rate unchanged

Daily News Staff Writer

The Ketchikan City Council on Thursday voted 4-3 to maintain the current property tax mill rate at 6.6 mills, turning back a proposed increase to 7.4 mills that the council had figured into its current year budget back in December.

The council in December had anticipated employee costs for the city and Ketchikan Public Utilities would be increasing after the completion of a compensation study and resulting plan that, in general, would adjust pay scales to competitive market levels.

Later this month, the council will hear a presentation on the compensation study. According to city estimates, the potential annual cost of the compensation plan would be about an additional $1.86 million.

At Thursday’s meeting, Council Member Judy Zenge made the recommended motion for a resolution that would increase the city’s property tax mill rate to 7.4 mills from 6.6 mills.

“I think we all knew this was coming,” Zenge said. “We talked about this during our budget (process), and here it is.”

Council Member Lew Williams III, who earlier this year was appointed to the council seat vacated by former Council Member Julie Isom, noted  that he was not on the council in December.

He cited the city’s current financial situation and healthy reserves as allowing the city to cover the potential cost of the compensation plan this year without having to raise property taxes.

“I don't think we need to raise it right at that moment to cover those kind of costs,” said Williams, who’s also co-publisher of the Ketchikan Daily News. “Assessments went up greatly last year. ... I expect they will probably go up again. Plus our reserves are in great shape.”

He said the city should hold off on a property tax increase, see what the impact of the compensation plan and future labor negotiations will be, and adjust the next budget accordingly.

“I think you could get by this year without doing it,” Williams said.

Council Member Sam Bergeron noted that the city had kept the mill rate steady in recent years, while the assessed value of real property has increased. The result: Property owners have been seeing higher tax bills despite the mill rate remaining unchanged.

“My property tax bills go up without the mill rate going up,” Bergeron said. “They go up tremendously.”

Bergeron added that residents are having to pay diesel surcharges for electricity, and that there’s fiscal uncertainty from the state budgeting process.

“I think that we as an entity need to hold the line on taxes and I think we need to look within our own resources to make it right with our employees,” Bergeron said. “Certainly I support adequately paying our employees. I think we have the wherewithal to do that without a tax increase.”

Council Member Mark Flora said he didn’t want the city to be in a position of not being able to deal with the compensation plan because it hadn’t adjusted the mill rate, citing a number of problems with the city’s existing pay scales, unfilled positions and upcoming retirements that will have an effect on costs.

“So staffing and payroll costs are going to increase over the next couple of years for a whole bunch of reasons, and I don’t know how much you want to dig into reserves,” Flora said, adding that the city was likely going to see more sales tax revenues from payment of taxes on internet sales, and that other additional revenues from cruise visitors are being considered,

Council Member Janalee Gage voiced concern about being in a position of not having enough funds to fall back on, relative to adequately paying for a compensation plan.

“We need to make it right with our employees or we’re not going to have nobody running anything,” Gage said.  

Williams responded that he wasn’t saying to “kick the can down the road.

“ I’m saying we have the money to cover it without raising the property tax this year,” Williams said.

Zenge asked City Manager Karl Amylon whether the compensation plan could be covered without raising rates.

Amylon agreed that it could be done, but that it wouldn’t be sustainable in subsequent years. The council would be back in the same situation of having to consider a mill rate increase in the future.

 “If you want to move forward with the compensation plan and not increase taxes this year, you can go into reserves but that’s unrealistic to expect to sustain that,” Amylon said, citing the cost of nearly $2 million.

“You’re going to be right back in this position come next June, because you can’t keep dipping into reserves to do it again and again,” Amylon said, adding that’s why the council in December developed the budget to raise the mill levy.

Amylon said that raising the mill rate by only 0.4 mills probably would be doable this year, but “recognize you’re going to have to raise it at some point down the road.”

After further discussion, there was motion to amend the main motion, to raise the mill rate by 0.4 mills rather than 0.8 mills.

 The proposed amendment failed by a 4-3 vote, with Zenge, Gage and Council Member Dave Kiffer voting yes, and Flora, Bergeron, Williams and Council Member Dick Coose voting no.

Williams then made the motion to amend the main motion by keeping the mill rate at its current level of 6.6 mills.

The amendment and subsequent main motion passed by a 4-3 vote, with Williams, Coose, Flora and Bergeron voting yes.

Further coverage of Thursday’s meeting of the Ketchikan City Council will be published in an later edition of the Daily News.