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Tioga looks at removing $2,500 sales tax cap


Posted 2/02/16 (Tue)

By Kevin Killough
The Tioga Commission wrestled Monday with changes in the city’s financial structure as the effects of the oilfield slowdown take their toll.
The city also appointed a member to the airport board.
At its first regular meeting in February, the commission took the first steps to remove a cap on sales tax. If removed, it would generate more revenue from industrial activity.
The city currently has a 1-percent sales tax but it only applies to the first $2,500 of a purchase. So, a $2,500 purchase would net the city only $25. The same is true of any purchase more than that amount.
“It’s basically just revenue the city doesn’t get,” said City Attorney Ben Johnson.  
The commission held the first reading of the ordinance to remove the cap. 
Following a second reading, if the  commission approves the measure, it will go to a city-wide vote in June.
The commission is uncertain if the full 1 percent tax is collected on the total amount of the purchase and anything over the cap goes to the state or if the tax is only charged on the first $2,500 of the purchase. 
The measure does not alter the tax rate and only impacts large purchases. 
Utility rates
Mayor Drake McClelland informed the commission R&T is increasing their rates by 10 cents per 1,000 gallons of water. Seven cents of that is an increase from the Western Area Water Supply Authority (WAWSA). Another three cents is an increase to cover the costs of a $20 million loan WAWSA is taking out to cover shortfalls from reduced industrial water sales.
McClelland said there could be further costs to the city for its own share of the $20 million loan. The commission wants to avoid passing the increase onto its water customers, but they aren’t sure how the increase will impact already strained city finances.
The commission requested the auditor’s office do an analysis on those impacts.
“I just want to make sure we’re good financially,” McClelland said. 
Water Commissioner John Grubb said the city absorbed past increases and doesn’t want to increase rates, but it will depend on the impacts.
“In all probability, we won’t have to raise them this year,” Grubb said.
Airport board
Last month, the city appointed a commission to review three candidates who submitted letters of interest for an open position on the airport board. 
The position was previously held by Mike Nobles who was appointed to fill a vacancy. His term came to an end in December.
The committee considered Wayne Knutson, Mike Nobles, and Eugene Knutson for the position. 
Commissioner Heather Weflen said the committee thought the top candidates were Wayne Knutson and Nobles. 
They decided to recommend Nobles to the commission. 
Weflen said the committee sees Nobles as a stronger candidate due to his previous experience and record of accomplishment during the time he served on the board and based on the detail in his letter of interest.
Lastly, they want to avoid any conflict of interest with Wayne Knutson’s business at the airport.
Commissioner Ronda Davidson disagreed with the last point. 
“I look at it differently. I think it means they have a stake in the growth of the airport,” Davidson said. 
Knutson, who was present at the meeting, said the board lacks any transparency and isn’t conducting business properly. 
“It’s just ridiculous,” Knutson said.
The commission voted to approve a motion to accept the recommendation of Nobles for the position. Davidson voted against the motion.

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