A change to the City of Nome’s seasonal sales tax has elicited complaints from a local non-profit that benefits from revenue generated by pull-tabs. KNOM’s Davis Hovey reports:
When the Alaska Gaming Reform Act, which governs the State’s Charitable Gaming Program, was passed in 1983, it allowed pull tabs to be sold in establishments all over the state while providing a source of funding to non-profits. Robert Hafner, who works for the Nome Chamber of Commerce, says nine non-profit organizations in Nome get a portion of the profits made from pull tabs, but the amount of money the non-profits receive has decreased as the City sales tax rate has increased. (According to Nome City records, there are only six non-profit organizations in Nome receiving some profits from pull tabs.)
Besides being involved with the Chamber, Hafner also co-manages one of the nonprofits: Nome Winter Sports Association, which maintains the local ice hockey rink. He is concerned about how NWSA’s main source of funding, pull tabs, is benefitting the City relative to local non-profits.
“This tax that we are going to have in the summertime, that’s going to increase to 7%,” explained Hafner, “which will place a larger disparity between what the City gets and the non-profit, greatly reducing almost any incentive to be in the pull tab business.”
Nome City Manager Tom Moran says without a seasonal increase to the city sales tax, the City budget would be cut further, layoffs would occur, and services for the residents of Nome would suffer.
“We, of course, received a substantial cut in our State aid called Community Revenue Sharing in FY ’17, which is what we are in now, and we realized that we are also going to see a decrease in FY ’18, so we tried to be proactive about it. We had the City Council pass a resolution in the early summer that said we would put it on the ballot as a ballot initiative for the voters of Nome, and it was passed approximately 60 to 40%,” Moran stated.
Hafner explains what he feels the purpose of pull tabs is under the Alaska Gaming Reform Act and why non-profits should financially benefit from pull tabs more than the City should.
“The whole idea behind the pull tabs was to relieve pressure from the cities and municipalities, which is in the sponsor letter that is written by the sponsor of the legislation and that was enacted in 1983, and the money primarily came to the non-profits, even here in Nome, for many years. And then in about the late 90s, early 2000’s, the City started enacting the sales tax on the pull tabs, so they weren’t always taxed, and then, when you tax every pull tab at 5%, the City wound up getting more money than the non-profit at the 5%,” exclaimed Hafner.
In order to remedy this issue, Hafner wants the City Council to change the sales tax placed on pull-tabs.
“What we would love to see is the City go to taxing pull tabs at the ideal net-level, even at 5% like the State does, which would give more money to the non-profit. We’ve got two days left to get our letters into the City asking for NSEDC funds. Here we are asking for money,” Hafner reiterated.
Moran says four years ago, the thought of taxing pull tabs at the ideal net-level was unsuccessful, and although it could be successful this time around, other fiscal problems would arise.
“Giving the ideal net-level to the pull tab business would just be one more cut to our services. I mean, sales tax is the lion share of how we fund the Department of Public Works… it’s how we give money to the schools, above and beyond what the State mandate is, so, for every action, there’s an equal and opposite reaction,” emphasized Moran.
If Hafner is unable to rely on pull-tabs to generate funds for the Nome Winter Sports Association, then he says he will turn to non-recurrent funding sources such as Go Fund Me or benefactors who are willing to donate their money. Regarding the ice rink, the City of Nome owns the property where the hockey rink is located and will continue to pay for its utilities, including fuel and electricity.
Hafner says he will work to ensure the financial future of the Nome Winter Sports Association and the local ice rink, which the NWSA uses, because the impact it has on himself and the community is worth the cost.
“I used to have a kind of quiet life until the ice rink,” Hafner recalled, “Now, I can’t go to the store without six or seven kids, they get off the bus and they’re like, ‘Bob, when’s the rink going to be open, did you sharpen those skates for me?’ and it’s just amazing; it really gives you an idea of the impact that you have. I had one individual tell me, ‘man, this isn’t what you asked for, Bob,’ and I said that’s not true, it’s exactly what we asked for when we started the idea of that rink; it was always about the kids.”
Hafner plans to air his grievances and suggest a solution during the next Nome City Council meeting, which he hopes will result in the Council implementing an ideal net-level tax on local pull tabs.
