Palmer council approves temporary sales tax hike for new library

What you need to know:

• The Palmer City Council voted to temporarily raise the city sales tax from 3% to 4% starting April 1. The increase will expire Oct. 31, 2027. The measure is intended to help fund construction of the Palmer Public Library without selling bonds and raising city property taxes.
• Supporters say the tax spreads costs among all shoppers and avoids higher property taxes, while opponents argue it sidesteps voters and could hurt local businesses.
• The library is expected to cost about $12 million, plus $3 million for interior items and possible overruns. The city has raised about $9.67 million so far, and the tax increase is projected to generate $3.3 million, leaving some costs uncovered.

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PALMER — Palmer shoppers will see higher sales tax bills starting this spring as part of an effort to pay for the city’s new library building without raising property taxes.

The temporary increase boosts the sales tax within Palmer city limits from 3% to 4% starting April 1. The rate expires Oct. 31, 2027, and will return to 3%, according to the measure. The timing is meant to capture purchases over two tourist seasons.

The Palmer City Council approved the change in a 6-1 vote during a regular meeting Tuesday, with Council member John Alcantra voting no. Council member Alison Collins proposed the measure.

The plan is modeled after a similar sales tax increase used to fund a new library in Wasilla in 2013, Collins said in an interview earlier this month. It is intended to allow Palmer to pay for its library without using a voter-approved $10 million bond that would trigger higher property taxes for city residents, she said. 

The sales tax spreads the cost among anyone who shops in the city, including individuals who will use the library but do not own property within city limits, she said.

“My goal in proposing this increased sales tax is simply to limit costs for those living in Palmer,” she said during the meeting.

Alcantra said he voted against the tax increase because he believes it sidesteps city voters and ignores the funding they have already approved.

“We don’t need to change the tools in the toolbox; we need to use the tool they gave us, up to the amount they gave us,” he said. “There’s absolutely no reason for us to be sitting here today saying let’s change what the voters approved.”

Groundbreaking for the new building is expected in April, city officials said Tuesday. The building is expected to open in 2027.

While the sales tax measure ultimately passed handily, some council members remained undecided until the last moment, visibly hesitating as they cast their votes Tuesday.

Council Member Sherry Carrington paused for nearly 30 seconds before quietly voting “yes,” while Council Member Penny Mosher voted “yes” after about an eight-second pause.

Carrington said she does not want to raise property taxes but is worried the higher sales tax rate did not receive enough public discussion. Mosher said she is concerned a higher sales tax will discourage people from shopping in Palmer.

Construction of the 20,000-square-foot, two-story library is expected to cost about $12 million, with an additional $3 million needed for the library’s interior, including furniture and potential construction cost overruns, according to city estimates.

The city has already raised about $9.67 million of that through grants, donations, and insurance payouts for the old building, which was demolished after its roof collapsed under a heavy snow$12 load in early 2023.

The temporary sales tax increase is expected to bring in about $3.3 million between April and its expiration in 2027, leaving the $3 million for furniture and possible overruns uncovered.

Council members said Tuesday they hope to raise additional money through new grants and donations.

The new sales tax measure does not prohibit the city from also selling voter-approved bonds and raising property taxes to cover costs. But city officials said they do not know whether doing so is allowed under the terms of the bond ballot measure approved in 2023. That measure gave the city permission to use bond proceeds for “planning, designing, site preparation, and construction of the Palmer Public Library,” and does not specifically list fixtures.

-- Contact Amy Bushatz at contact@matsusentinel.com