February 6, 2014 | Vol. 40, No. 6

Committee discusses tobacco tax recommendation

A tobacco tax might be the answer to the Petersburg Medical Center board’s future infrastructure funding concerns.

The sales tax committee discussed last Tuesday recommending the initiation of a tobacco tax to the borough assembly.

PMC CEO Liz Woodyard attended the meeting and said many communities across the country support their hospitals with a similar tax.

“That’s a norm,” Woodyard said. “That’s not something that’s unusual. In this case I’m specifically talking about tobacco because we absolutely know we can attribute healthcare diseases and problems to smoking or the use of tobacco.”

Woodyard said similar to a fire department, a hospital is an essential service to the community.

“I am here before you today to ask that the sales tax committee consider a tobacco tax that would somehow be used to support the building or the infrastructure or go into a fund that would help build a new hospital at some later date,” Woodyard said.

The Juneau and Sitka borough’s tax tobacco and use the revenue to support their community hospitals. The City of Ketchikan doesn’t tax tobacco but uses a portion of its sales tax revenues to fund capital facilities projects for its city-owned hospital.

Committee member Sue Flint supported Woodyard’s request.

“The hospital (board) has approached the assembly and said they, in the future, are going to have capital needs that the borough needs to help with…we were thinking this might be a nice way to do it,” Flint said.

PMC Lab and Imaging manager Liz Bacom reported 153 smoking related diagnoses at PMC during 2012 and it costs thousands of dollars a month to maintain the equipment used to make those diagnoses.

“To be able to have those kinds of high quality diagnostic equipment doesn’t come free,” Bacom said. “Cigarette tax would definitely be a benefit for our department because that’s a capital improvement.”

John Murgas said it’s not the mission of the sales tax committee to raise taxes for tobacco.

“But this is a wonderful way of bringing up this discussion,” Murgas said. “If we did want to move forward with that, about all we could do is make a recommendation to the council (assembly).”

The committee is charged with reviewing the sales tax code and recommending changes so the borough can generate an equal or greater amount of revenue so it doesn’t have to decrease services or raise property taxes.

The committee has reviewed other issues such the senior exemption and the $1200 sales tax cap among others. It has made no official recommendations.

The committee’s next meeting is on February 25 when it will make its final recommendations to the borough assembly. The assembly will then decide whether or not to move forward with those recommendations. Any changes would come before the public for a vote.

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