When is a per cent nonsense?

Thursday morning the 27th (tomorrow, 10-11 AM AKT) KYUK radio will have a one-hour call-in show to discuss the ballot measure for the City of Bethel voters. This is an overdue discussion, occurring just in time before next Tuesday’s election.

The ballot measure is called Proposition One. It is the City’s second proposition to be called that, but the first to actually be on the ballot for voting.

The actual proposition is–

CITY OF BETHEL PROPOSITION NO. 1 ONE PERCENT INCREASE IN BETHEL SALES AND USE TAX

Shall the City of Bethel increase the sales tax and use tax by one (1) percent (total tax of 6%) for a period of 2 years followed by a decrease of a half (.5) percent (total tax 5.5%) which shall sunset on October 2, 2027?

YES

NO

Several of the existing city councillors and the designated mayor, the city attorney, several of those running for city council next Tuesday (but not all), a member of the radio board of directors, the YKHC wellness department, the KYUK news editor, plus others have stated this proposition says a swimming pool will be built out of the 1 cent increase for every dollar spent for food or heating fuel.

How can one consider this proposition prior to voting?

  • Q. where do “swimming pool” and “rec center” appear in the proposition?

In fact, nowhere does the proposition say how the City Council will spend the money received. No amount of “we know where the taxes will be spent” can encumber the money for anything the Council doesn’t authorize.

  • Q. How much will the new tax be, if approved?

1. increase the sales tax and use tax by one (1) percent
and
2. (total tax of 6%)

The current sales tax is 5% or 5 cents for every dollar, added to the sales total.

1. An increase in sales tax of 1% (one per cent) converted to decimal form is 0.01 times 0.05 dollars or 0.01 times 5 cents. This equals 5.0005 cents per dollar in sales.

and

2. An increase in total tax to 6% means 1 cent must be added to the existing 5 cents of every dollar. How much is one cent of 5 cents? that is, what percent is one out of 5? A twenty per cent increase in the existing sales tax will equal 6 cents per dollar in sales tax.

Think of this another way. You find the cost of doing business has gone up 20%. You now sell a half-gallon of milk for $5.00. What will the new price of milk be? [20% times $5 = $1.00 Add this to the current price. Therefore $6.00 is the new price]

  • Q. How much will the new tax be after two years for the next 18 years, if approved?

1. decrease of a half (.5) percent
and
2. (total tax 5.5%)

The 2009 sales tax will be 5.0005%. A 0.5 per cent equals 0.005 in decimal. The 2010 to 2027 sales tax is ______

and

The 2009 sales tax will be 6.0%. A half per cent equals 0.005 in decimal. The 2010 to 2027 sale tax is _______

If the proposition passes, how much money will go to the swimming pool/rec center?

$________________ but also $______________

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It doesn’t take a college statistics course, like the one the mayor had, to multiply decimals because this is part of primary school arithmetic.

Suppose the proposition had instead been worded–

Shall the City of Bethel increase the sales tax and use tax by one (1) percentage point (from 5 cents per dollar to 6 cents per dollar or total tax rate of 6%) for a period of 2 years followed by a decrease of a half (.5) percentage point (total tax rate of 5.5%) which shall sunset on October 2, 2027?

There would be only one tax increase to be voted on, not two mutually exclusive increases.

~~~~~~~~~~~~~~~~~~
There are other issues which should be considered before communal action is taken. Will the proposed action do what is intended or solve the stated problem? Are there better actions to take, including not taking any action? What are the total social, cultural, economic impacts (good or bad) of the proposed action? Do we have the correct problem defined?

The proposition states two different tax increases (1% of the existing rate and from 5% to 6%). Either makes a cost for retailers to re-calibrate their registers. Many other retailers do not use a computer for calculation or have small individual sales (under $100.00). The ordinance would increase the burden to small businesses and/or to residents of Bethel. Retailers would either have to overcharge customers (illegal) or pay the additional tax themselves.

The costs of sales tax processing by the City of Bethel would increase as would the auditing costs of local businesses and the legal pursuit of any delinquent taxes.

The original ordinance proposer (Councilor Leinberger) should have specified the annual (years 1 through 20)
* increase in revenues to be expected, including the projected population and economic condition
* increase in costs to the City
* increase in costs to the retailers (small and large)
* increase in cost of living to the consumer

The proposed tax increase will not go to a swimming pool. But if the increase in sales tax was tagged specifically to the operation and maintenance of a swimming pool and structure for 20 years, the total cost analysis of the pool/rec center must also be included for consideration (sustainability plus total costs to consumers). Would an increase to 5.005% even cover the costs of implementing the tax? Part of this analysis needs to examine the change in demographics for the next 20 years. We’ve lost over 600 people (out migration) in the past 12 months.

Are we even sure a tax increase, of whichever size the courts decide on, is important enough to charge the elderly, the fixed income, and the poor? We currently have double-digit unemployment (this figure only counts those registered for unemployment locally, not the additional people who don’t have unemployment benefits).

For example, adult proponents of the tax increases say the money is needed for a swimming pool rec center (in addition to the schools’ gyms, the cultural center, the youth center, and the library. We also have a home-grown small business fitness center.) so children have something to do to keep them off the streets. Not too long ago, the 4-H centennial project was for young people to identify the greatest needs in their community. When the youngsters spoke among themselves they expressed the overwhelming need for “safe houses”, places to go with sober adult supervision when home got to be too much.

Another reason given for the pool tax was to encourage new families to move to Bethel. The city already disbanded elder services. For over a decade we’ve been promised an assisted living home for our people to age in place, at home, instead of in Anchorage where one can die unattended even by staff. Would you move on the basis of wishful thinking? Yes, many people do. But don’t we deserve better, a genuine sustainable community instead of the one we wish we had?

Your turn. Add your 2 cents worth–

  • Please find any arithmetic errors I made above.
  • How would you have worded the sales tax proposition for honest assessment by voters?
  • Are there any projects you think deserve a sales tax increase? What would you propose?

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