Ketchikan Gateway Borough directs staff to prepare ordinance raising single‑unit sales‑tax exemption to $6,000 as FY27 budget work begins

The Ketchikan Gateway Borough Assembly voted Jan. 23 to ask staff to prepare an ordinance to raise the single‑unit sales‑tax exemption from $2,000 to $6,000, a change staff estimated would generate roughly $1,200,000 in additional revenue for the general fund.

Finance Director Sharolyn Thomas told the Assembly during a work session that staff plans to start the FY2027 budget using a mill levy of 4.85 and a 3% property‑tax revenue increase, and that the proposed exemption change was intended to build general‑fund reserves toward a policy goal of three months’ operating coverage. Thomas briefed members on fund balances and revenue sources, noting that sales taxes and charges for services remain the largest general‑fund revenue streams.

The Assembly’s motion, made during the session’s recap and carried 6–1, directs staff to draft an ordinance that would also cap residential‑rent tax treatment and contractor exemptions as part of the proposal. Assembly members asked staff to return a range of revenue scenarios (for alternative exemption thresholds such as $3,000, $4,000 and $5,000) so the Assembly can compare fiscal impacts before final readings and adoption.

Why it matters: staff and several Assembly members said the change is a tool to rebuild reserves after recent transfers and obligations reduced available fund balances. Supporters argued it would shore up the borough’s ability to maintain services without cutting programs or raising the mill levy; critics noted the change will shift tax incidence and urged coordination with the City of Ketchikan so merchants do not face inconsistent rules.

What’s next: staff will prepare the draft ordinance and financial analysis for the Assembly, including alternative exemption levels and the estimated revenue impacts on the FY27 proposed budget. The ordinance will proceed through the borough’s normal two‑reading process and be available for public review.

Quotes: Finance Director Sharolyn Thomas said, “This change is estimated to generate an additional 1,200,000 in revenue for the general fund. This will significantly improve the fund balance of this fund.” Assemblymember Thompson, in favor, said the measure would “help build up our general fund reserves.”

The Assembly’s direction will be incorporated into staff’s starting assumptions as departments finalize budget requests ahead of formal introduction in spring.