Haines commerce committee advances cruise-ship tax and phases up building-materials exemption; nonprofit changes held

The Haines Borough Commerce Committee on Nov. 18 voted to send most proposed updates to the borough's sales-tax exemption code to the full assembly while keeping proposed changes to nonprofit exemptions in committee for further work.

Chair Evan Sargent opened the discussion of ordinance HBC 3.8(o), saying the draft contains several cleanup items and three substantive changes: a sales tax on cruise-ship commercial passenger vessels (CPVs), an increase to the building-materials exemption (currently $5,000), and revisions to nonprofit exemptions. Staff and the tourism office reported outreach to industry stakeholders and said cruise-line operators asked for as much advance notice as possible to prepare; committee members agreed to refer the CPV provision to the assembly so it can move through public hearings and reach cruise operators before the next season.

On building-materials exemptions, committee members noted the $5,000 threshold dates to 1979 and "needs updating." Builder Glenda Gilbert of Haines Home Building told the committee: "Inflation proof it; that $5,000 in 1979 comes out to about 22,000. As long as it doesn't go over 22, I'm happy." Homeowner Thomas Seeley said he benefitted from sales-tax relief when he built in the 1990s and supported capturing more revenue from construction.

Staff provided a revenue illustration, saying a $10,000 cap would net roughly $20,000'$25,000 and a $20,000 cap would net roughly $60,000'$70,000 (staff estimate). Committee members debated local competitiveness (concern that buyers might shop in Juneau or use shippers) and the effect on small projects such as sheds and greenhouses. To limit economic disruption and provide time to assess impacts, members favored a phased approach; the committee moved to increase the exemption to $12,000 initially, with a planned step to $22,000 after two years, and asked staff to prepare the ordinance language and referral.

The nonprofit-sales-tax provision drew the most hesitation. Members emphasized that many local nonprofits are volunteer-run and use fundraising revenue to support community services; they discussed alternatives such as exempting donated items resale per IRS guidance or applying taxation only when gross sales exceed a stated threshold. The committee decided to keep the nonprofit portion in Commerce for further analysis while referring the remainder of the ordinance (including the CPV and phased building-materials changes) to the assembly. The clerk summarized the motion and the committee recorded the motion as carried unanimously at the close of the meeting.

Next steps: staff will draft ordinance language reflecting the phased building-materials cap and the CPV provision for referral to the assembly; the nonprofit exemption will remain under Commerce Committee review for additional policy options and threshold mechanics.