Ketchikan draft budget would raise summer sales tax to 6% and utility rates 8% a year

A draft 2027 budget for the City of Ketchikan would raise the summer sales tax to 6% and set 8% yearly increases on electric, water, sewer and harbor rates. City staff also say the council should consider raising property taxes for police and fire operations, an increase not built into the draft.

The Ketchikan City Council gets its first look at the budget Tuesday, Nov. 17, at a 6 pm work session. It is scheduled to adopt the budget Dec. 17. Under the city charter, the council must adopt a final budget by Dec. 29, after at least one public hearing where residents can testify.

The summer sales tax rate, which applies April through September, would rise from 5.5% to 6%. The 3% winter rate, October through March, would stay the same. The budget says the increase would offset wage raises for city workers in three unions, representing electrical workers, firefighters and public safety employees, and for employees outside the unions, citing council action taken Sept. 18, 2025. Sales tax revenue is estimated to rise from about $20.1 million to about $21 million, about three-quarters of it collected in summer.

Electric, water, wastewater and harbor rates would each rise 8% a year for four years. Solid waste rates would rise 8.5%: 5.5% to pass along the rising cost of the city's disposal contract and 3% for costs tied to the closed landfill.

Ketchikan Public Utilities, the city-owned electric, water and telecommunications utility, calls 8% the minimum needed for operations and debt payments, including $25 million in bonds voters approved in 2026. It says the utility cannot keep drawing on reserves for capital work past 2026, though even with the increases it proposes drawing about $5.9 million from reserves. It warns that about $83.9 million in bonds in the electric division's five-year plan would require a 32% electric rate increase to pay off.

Property Tax Question

The city currently levies 6.6 mills, or $6.60 for every $1,000 of assessed property value. Staff write that a mill rate increase "should be considered to fund police and fire operations." A 1-mill increase would bring in about $1.06 million, according to the draft.

General government spending totals about $97.6 million, about $30.9 million of it capital work. Reserves are projected to fall from about $100.9 million to about $95.6 million, and the budget says reserves are "trending down because revenues are not keeping up with expenditures." Rising costs it lists include 4% to 5% cost-of-living raises, a 10% jump in health insurance, a 12% jump in liability and property insurance and about 10% for workers' compensation, citing employees injured in the August 2024 landslide.

Background on the Council's Decisions

On Sept. 18, 2025, the council approved the firefighters' 2025 to 2027 contract on a motion that also directed staff to "prepare the necessary tax and rate increase ordinances." Council members Finnegan, Kistler and Zenge and Mayor Bob Sivertsen voted yes. Coose, Mahtani and Gass voted no. Abby Bradberry abstained.

As the minutes paraphrase him, Sivertsen said "the only way we can do it is by increasing taxes and rates." Riley Gass asked staff to bring back something more affordable for ratepayers and taxpayers. Jai Mahtani said the increases were not because of the firefighters union but were across the board.

On June 25, 2026, the council set a 5% soft cap on the 2027 budget and heard staff tax and rate recommendations, according to the minutes. Judy Zenge said of small businesses, "With the increase in rates they're not going to be able to afford to stay open." Bradberry said residents should not have to pay for costs that should fall to the industry. The council asked staff to research a cruise passenger tax modeled on Skagway's excursion tax. The budget says staff drafted a Visitor Impact Excise ordinance in response, to be administered with the borough if enacted.

Of the council members quoted, Zenge, Gass and Bradberry remain on the council. Mahtani resigned in July 2026.