Juneau: 9-2-2026 Assembly Finance Committee

Directly for an organization that is doing good in the community. I don't really understand why I would not pay sales tax if I went to one nonprofit and bought something and they made less than $300,000 in sales versus one that made over. There's— I don't understand why that would be good policy. I also think, you know, Ms. Yuciani said it, but The theory behind why we are considering getting rid of this exemption for nonprofit sales is because to treat them like we treat businesses, and I don't understand why businesses that make less than $300,000, they also have this exact same burden. And as somebody who has a, you know, yoga business that makes for $400 a year, I am able to collect, remit, and file my sales tax.

So I, I just don't think it, it really makes any sense. I know this will be a burden on our nonprofits, but I— but that's not a good reason to enact a policy that, that is not based in any cogent theory about why we tax.

Thank you, Miss Wall. Any further discussion? Uh, Mr. Smith and then Miss Hall. Thank you, Madam Mayor. I'll, um, I'll speak in support of this amendment.

I—. We're, we're obviously trying to like thread in anyway. Are facing some major revenue issues, and yet at the same time we have numerous small nonprofits that are scrappy and don't have— I'm gonna say just maybe don't have the level of sophistication, it's maybe the level of capacity to be able to do some accounting for this, or do accounting for some of their sales. In which I can just imagine, I mean, I just think about bake sales and things where you're just selling lots of little items all the time. I hear the argument about the business piece.

I get maybe there's a bake sale business or something out there, but I guess I see this as kind of a way to provide some relief to administrative burden of, again, nonprofits that just have less capacity to do the accounting, the bookkeeping from probably the myriad ways that they are raising funds in small pieces, or I guess To me, I hear the, oh, this— there's a number and, you know, you have choosing a number. I mean, we have to do it all the time when we're like, oh, it's a 5-foot setback, oh, it's a 10-foot setback. Sometimes you just have to choose a number. Like, I, I, I, and sometimes the number doesn't make sense and you wish it was like slightly different. But, um, I guess I'm, I'm open.

I feel like this provides some, you know, administrative relief to small nonprofits that may not have the capacity to do the accounting, or we've heard will incur significant other costs to do that accounting, or maybe at some point would just say, you know what, we're not going to charge 5 cents on these cookies and things we're selling. We're just going to eat that cost, therefore, you know, reduce their revenue.

I'm not, you know, I'm not sure if it's a perfect number. I might have a motion later to ask staff or do some things to spread this out to nonprofit organizations or nonprofit, you know, groups that work with nonprofits to try to get some more feedback in the next 2 weeks should this go forward. But seems like, you know, you know, but I have a lot of faith in Mr. Saniger to do, you know, research and looking and trying to find a good number. And, you know, from what it sounds like, might be a good place to start. Thank you.

Uh, thank you. We have Ms. Hall and Mr. Kelly. Yeah, thank you. And, um, I will also object, and, um, you know, for many of the reasons that Assemblymember Hughes-Candies did. I, I also think there's probably a more, um, a simpler way to, to do this, and I'll offer that in my amendment, um, that will still allow us to collect the, the sales tax, but, um, not in such a kind of burdensome, potentially for staff and, and also for the nonprofits.

Mr. Kelly, thank you. I, I think I will support this amendment for many of the same reasons as Mr. Smith. I think Mr. Steininger, I mean, to some degree it doesn't sound like he completely pulled the number out of thin air. He did describe a little bit of process in there as far as like looking at what certain organizations are, are collecting and then adding a little bit of a cushion to that. I think we I think $100,000 seems like a reasonable cushion, and maybe it'd be good to do a little bit more research if this does move forward.

I, I don't know that I'll be supporting the overall amend— the overall ordinance if it goes through, but I think that this amendment improves the ordinance. And so if it does go through, I think I would like to see this part of it enacted. So I will be voting in support of this amendment. Oh, thank you, Mr. Kelly. Any further comment?

Mr. Brooks.

Thank you, Madam Mayor.

I'll, um, I'll be voting against this amendment, and not for the same reasons as other members. I actually, um, think it's very well thought out and very creative, and I like things like that, but not necessarily in tax code. And this, I don't— the burden that's associated with having to, you know, collect and remit sales tax as an added step for these nonprofits, this goes a little beyond that with the type of exemption and the 2-year renewals. It adds another level for the staff and the business side of it that goes just beyond like a monetary tracking. And so just to, you know, keep things more to the point and simple, I think, you know, going with some of the other amendments that might come up would, would achieve the same goals but not make the tax code as long as it should or shouldn't be.

Thank you, Mr. Brooks. Ms. Wall.

Another question for the maker of the motion. I—. You talked a little bit about this, and maybe I didn't quite follow the decision to base the income the, sorry, the sales tax, the sales number on just sales, services, and rentals. In my mind, if you make your revenue through donations, you could be a huge organization, very sophisticated, only have a small portion of your sales, um, of your revenue be sales, and, and those sales would be exempt even though you probably have the capacity to do that because you're, you're large, you make your money another way. Did you— why was, why was it not all revenue as a proxy of kind of capacity to administer this Mr.

Steiner. Certainly. So the organizational capacity that you might develop when you're based entirely on donations is going to be different than the organizational capacity that you develop if you have a large footprint of retail, for example. You know, your donation capacity, you, or grant capacity You know, you'll have grant reporting, you'll have accounting, you have the direct services you provide, but running a retail business is different than running a social services organization. And so I did not want to create a disincentive to having small retail operations for a nonprofit that is primarily grant or donation funded.

You know, we don't want to say, well, you know, if you're a large donation organization and you want to do something that'll generate about $50,000 in sales, that you have to establish and put together the full footprint, because those are not necessarily going to be analogous competencies as an organization. And so that's kind of why I was targeting in that way. Certainly there's, you know, you could look at it as, you know, you could do the same concept with gross revenue. Of course, that would be a different angle to do this. I think we, we have a bunch of different amendments in this packet that are all kind of trying to get to the same idea of how do we differentiate What an organization that is going to be, you know, should be expected to have the organizational competency to collect and remit sales tax.

And there are a couple of different ways to skin this cat. I chose this one because I felt like it was the fairest to our nonprofit community, especially the small nonprofits that are volunteer-run, not nearly as well organized as a for-profit business in terms of collecting revenue in this manner. You know, they collect revenue in a much different manner. I too own a for-profit business and remit sales tax and collect way less than $300,000, but it's just me. It's, it's different.

There's different motivations. There's different, you know, kind of competencies to how you do that, that if you just are running off of volunteer bookkeeper, you know, bringing in tickets for shows that you put on, you might not have. So, so that's what I was looking at here.

Follow-up to that, Ms. Wall, are you good? I'll make one more comment if it's okay. I just have a point for information on that discussion, if I may. Um, let's let Mr. Brooks talk and then we'll come back to him as well. Uh, this is just a quick question for the, the finance staff.

Um, I know in private business loans don't count as income. How are grants counted for nonprofits? Does that go under income for them, or is that much like a loan would be applied for a private business?

Madam Finance Director, thank you for the question, Mr. Brooks. When we're talking about sales and sales tax, grants are not sales. So grants and donations are not sales, as Mr. Suninger's amendment kind of calls out. Sales, services, rentals are the primary things that count as sales.

Thank you for that. Um, Ms. Wall. Thank you, Madam Mayor. I appreciate Mr. Steiner laying out his theory there. I will say I don't agree.

I do run a nonprofit that is mostly donations and does some sales, and it's not that much work. And we have—. I have a staff, so I have me, one staff, and we're able to do it. I do think volunteer-only nonprofits are going to struggle, but I, I really don't like the, the idea that a big nonprofit that's mostly grant-funded would be exempt from this because I think if they have staff, they have the capacity to do this. It's not so different to run a point-of-sale system as it is to manage Grants, you have to set it up, but once it's set up, it's, it's not that hard.

So just saying, if, if we, if this fails and people introduce something that's more focused on our actual small nonprofits that are volunteer only, I'd be willing to entertain that amendment. Thank you, Ms. Wall. Seeing nothing further, I'll weigh in here real quickly. I appreciate the conversation. I think it's been a good conversation.

At this time, I would probably support the amendment. Um, the $300,000 is very similar to— I talked to Genoa Community Foundation, and that's about the number. It seemed to make sense. Um, but I'm thinking back to a time when I was treasurer of one of the nonprofits that supported high school activities, and there is no point-of-sale system, and it was all you could do is collect money from the children. That was very tough to get them to turn in their money.

So, um, if you're very small nonprofit, I can see why it would be burdensome. So that's why I am supporting the amendment. But we have a motion with an amendment, uh, number 2. Um, Madam Clerk, will you call the roll? Thank you, Mayor Weldon.

On the motion to amend Ordinance 2026-32 with Assemblymember Steininger's amendment on supplemental packet page 113. Assemblymember Steininger. Yes. Assemblymember Hughes-Scandies? No.

Assemblymember Smith? Yes. Assemblymember Hall? Nope. Assemblymember Atkisson?

No.

Assemblymember Wall?

No. Assemblymember Brooks? No. Assemblymember Kelly? Yes.

Mayor Walden? Yes. The amendment fails, 4 ayes, 5 nays. All right, we're back to the main motion as amended. Uh, Ms. Hall?

I would like to offer an amendment, and you have that before you if you need a minute to read it.

All right, Miss Hall, go ahead. Um, yeah, and I speak to the amendment. So this would, um, uh, the additional language would be, uh, that you would be exempt if you engage in intermittent fundraising activities which do not take place in a permanent retail establishment. This touches on some of Mr. Brooks' amendment, but instead of physical storefront location.

Language that would cover, you know, if someone were doing online sales in a permanent retail establishment would be a little more inclusive of the different possibilities. So the definitions that would be added would be permanent retail establishment is a fixed location operated by a nonprofit entity that's open to the general public for sale of tangible, tangible personal property for more than 30 cumulative days in a calendar year. An intermittent fundraising event is any discrete campaign, gala, auction, bake sale, or temporary market drive conducted by a nonprofit entity for the primary purpose of raising organizational funds, provided the physical selling window does not exceed 14 consecutive days and occurs no more than 4 times per calendar year. So for instance, you know, say you're the symphony, your ticket sales would be taxed, but the bake sale in the lobby would not.

And this wouldn't be tied to the size of the permanent retail establishment. Okay, we'll go with questions first. Any questions? Mr. Kelly. Thank you.

I noticed I just had a question about your definition for permanent retail establishment. You focus specifically on the sale of tangible personal property. Would it— I can't think of any specific examples right now, but I can also think of other things that a permanent retail establishment might sell that would be a service. Did you mean to kind of include that? Was that meant to be also kind of included in that definition, or?

Not only—. I, I guess I would need to know examples of services that might be included in a permanent retail establishment.

Mr. Kelly, do you have any examples that you can think of? Or staff, if you—. Ms. Wall?

A nonprofit yoga studio or like karate studio. Would that meet that criteria of a nonprofit offering a service in a retail area? Uh, through the mayor, that's kind of— that would be kind of— yes, that was what I was thinking of.

Way to think of it, Mr. Kelly. Do we have anyone in our community doing this? Uh, I'm—. Yeah. Oh, so— oh, nonprofit selling.

Yeah. Okay, anyway, we'll, we'll let the maker of the motion think about that for a minute. We'll go to Ms. Hughes-Candies. Uh, thanks, Madam Mayor. Um, question for the symphony.

It is helpful for all of these to try to picture examples. So in that, could you— the bake sale would not be because it is only happening when there's a show and they're selling the symphony tickets year-round, or could you tease that out for me? Because I'm trying to—. Miss Hall, well, that, that would be it, you know, the ticket sales would be ongoing year-round. Someone could purchase some at any time, but, um, a discrete intermittent fundraising event would not be that night only.

Okay, thanks, that helps.

Yeah, I see Mr. Smith and then Mr. Brooks. Thank you, Madam Mayor. Does a temporary market drive include like raffle tickets? Is that—. I would think so, but I would have to—.

Madam Attorney, I'm looking— or Madam Finance Director, either one of you. Sure, I'll take that one. I would include that in in the definition of a temporary market drive, raffle tickets would meet that definition of being temporary in nature. But if you want to add them specifically, you can. Can I follow up?

Follow up, Mr. Smith? Do you have other examples of what— of temporary market drives?

I can Google it too, but I'm just like, I just—. Sure. I mean, I guess what I would say is a temporary market drive and discrete campaign will likely overlap. Some of these likely overlap depending on what a nonprofit calls their event. You know, you've got the jar calendars that come up at Christmas.

You might have temporary things that occur at the Thanksgiving fair.

But I think the temporary market drive and discrete campaign may overlap there. This was, if I'm correct, and I'll look to the maker, I think it was meant to try and encompass all the options, but there almost always are more or things that, you know, come in the middle there. Double follow-up. Okay, double follow-up. With like, so Krispy Kreme donut sales, car wash, Anyway, like, okay, I'm sorry, I'm just trying to get into what the vein of that temporary market drive is.

Now that everybody's thinking of Krispy Kreme donuts, Mr. Brooks and then Mr. Steininger. I'm good. We can go on to Mr. Steininger here. Mr. Steininger. Yes, if I understand the intent of the amendment, it's, you know, to kind of carve out, you know, those fundraising events like galas or auctions that are done on occasion, but I'm thinking of like an organization that— I'll pick on them because they're sitting in the audience tonight to talk to us, but say the JAC, they have a physical space.

If they wanted to hold a gala as a fundraiser, I assume it would happen in the JAC just out of assumption. Would that then mean they would have— they, because they own a physical space or have physical space, that they're operating would then have to charge sales tax for their gala tickets while other nonprofits would not? Or am I misreading this? Yeah, it is not physical storefront location but permanent retail establishment. So that, that's, yeah, so intermittent fundraising activities would not, would not fall under that.

But any of their permanent retail establishment would, such as the gift shop in the lobby.

Madam Attorney, you want to weigh in on that one, please?

Sure. So I believe— I mean, a lot of this has to do with what the maker of the motion intends on what she wants. And so if The JAC has a permanent retail establishment that is that gift shop area that when you first walk in, that would be taxed. The intermittent fundraising, which are discrete campaigns, galas, auctions that occur in their space, then, then it would probably be taken on a one-by-one basis because it also includes rentals, right? So if they are renting out to different silent auctions or galas on a permanent basis, which is something that they do, they would probably have to submit or collect and remit sales tax on the rentals.

But if they're throwing an individual gala, it would probably not have to have sales tax associated. So it is going to be very individualized as to what is kind of the standard course of business for them. Mr. Steinegger, did you have a follow-up to that?

Yeah, I think that covered it. So the nuance is that the entire space is not a retail space. There's just— you enter through the gift shop and the event's happening not in the gift shop, effectively.

For the record, the attorney is nodding her head. And I would say I'm going to look to the maker because if that is not what she intended, we can adjust the language. Thank you. Since it is a permanent retail establishment, their sales such as rentals of the space, the thrift or the sales in the the gift shop, but if they were holding their own intermittent fundraising events such as a gala, that would not be, that would not be taxed. However, if people went out to the gift shop and bought stuff, if it was open during the fundraiser, that would be taxed.

So this is the way I understand it. All right, Ms. Wall.

I mean, I'm hearing the intent of the maker here, but I mean, I guess when I read this language, it literally says engage in fundraising activities which would not take place in a permanent retail establishment. To me, that means you go into the Jack, you're going to a gala, you're in a permanent retail establishment, and you're doing a gala. You, you, all of that, that event would be taxed for the jack only.

That's how I read this language. I don't know how you'd read it a different way, but maybe I'm confused. I'm letting her finish, Mr. Kelly. Mr. Kelly. All right, I think I understand.

I mean, I kind of understand the confusion, but I think being a programmer, I kind of am used to kind of reading things in kind of conditional statements sometimes. And so what I, what I see here are two conditional statements. One, in one case we have where it is an intermittent fundraising activity, and in one case we have where it is a permanent retail establishment. The latter part is true. The JAC would be a permanent retail establishment.

And in this case, though, it would be an intermittent activity. So I think we kind of look at both of the conditions for what the exemption would require. So to be taxed, basically it would need to be— it basically need to be not intermittent, and it would need to be a— or it would need— yeah, anyway, I'll— okay, thank you. I think that was helpful. Mr. Brooks.

Thank you, Madam Mayor.

I, I'm definitely supportive of this amendment, and I think that the— it really is on going along the baseline of, you know, core definitions of what fundraising is. And, you know, fundraising by federal definitions is supposed to be temporary in nature for specific purposes. And when you get into those more established retail areas, that's when you're kind of falling out of line on what fundraising is defined as. So trying to capture those things in the retail setting, you know, I think that unlike my amendment, adding those definitions puts out a good framework and guidelines for, you know, definitely the how, how we would encompass the, the nature of actual fundraising as opposed to just year-round retail activities. And, um, a question for the maker of the motion.

So as this is written, would it be applied to organizations like St. Vincent's, um, Salvation Army's thrift shop, or any gift shop owned by a nonprofit. Miss Hop, as it is now, it, it would apply to those, although that may be a future amendment, but I'm not prepared for that now. All right, Miss Huskanes, we're still on questions. Do you have a question? Yes, I do.

And Mr. Smith, do you have a question? Okay, thank you, Madam Chair. Ms. Hughes-Scandies and then Mr. Schwinn. Question for staff. How would you interpret the Girl Scouts with this?

Would you view them as taxable?

Thank you for the question, Ms. Hughes-Scandies. I think in looking at this definition, that would be an intermittent fundraising event. As it's written, the selling window does not exceed 14 consecutive days. And I honestly don't know how long cookie sales go on, but that would be the question, right? If it exceeds 14 days, 14 consecutive days as written here, then it would be— they would need to collect and remit sales tax.

Okay, thank you.

Madam Attorney, do you have anything to add? Okay, you look like you want to say something, but all right. Um, Mr. Smith. Thank you, Madam Mayor. I was going to ask about the time frames.

Um, and again, we have to choose a number sometimes. Um, I guess just any background on the number. I'm not—. If you must know, AI.

Um, and again, that, that could like potentially be amended, you know. Um, yeah, I know there are some, although that's a big enough organization and that's a pretty, uh, yeah. So, so anyway, that, you know, I'm putting it out here as the 14 consecutive days and occurs no more than 4 times per calendar So you don't want one thing bleeding right into another as a workaround. And, you know, based upon feedback we get from what, what we passed this evening, we can, you know, if this is going to be burdensome on some of our nonprofits. Well, it's all going to be burdensome, but it's also important and super common that this is something that is done collecting from nonprofits.

All right, any further questions? Mr. Kellen. I guess this would be a question for the attorney. I'm just considering a small housekeeping amendment because I feel like that services should be included in this permanent retail establishment. So if I just made it something as simple as the sale of tangible personal property or services, would you be able to tell me what, what effect that might have?

Or would you have maybe ideas for better language that might accomplish what I'm trying to do? Why, let's take a 2-minute at ease so you can just go chat for a minute.

Who are we missing? Well, bring us back on record. Sorry, several people, um, have talked to the attorney to try and sort this out. So, um, who started this? Mr. Smith, you started this mess to talk to the attorney, to talk to the attorneys.

No, who was— Mr. Kellen. Okay, did you get your question solved, or do you have anything to amend or fix, or what do you want? I, I mostly got my question solved. I think I want to do a little more research before, uh, proposing my amendment. So, all right.

And then, Mr. Smith, you were talking to the attorney about a possible amendment? I, I was. Thank you. I guess I was getting a little, not caught up, but I was looking at the situation of the JAC, which operates a permanent retail establishment in a portion of their building. And if they or any other organization, any other nonprofit was doing a event in the event portion of the building that the Jack would have to collect and remit the sales tax from, from the, from the rental.

Is that right, Madam Attorney? That is correct. So, I mean, some other, some options we were looking at was which do not take place in their permanent retail establishment. So which doesn't necessarily solve the issue of the Jack having an event at the Jack, but it would eliminate the issue of whatever, you know, Veterans Association doing an event at the Jack.

Are you offering that up as an amendment? No, because there's another option is to just strike the removing the which do not take place in a permanent retail establishment. So therefore it's just going after intermittent fundraising activities. Anyway, I'm just working on— those are the things I'm going through and trying to figure out what a solution is, but others may have. All right, Mr. Steininger, you're throwing your hand out there, and then Mr. Brooks.

Yeah, I'll throw my hand out just to offer an amendment to strike, which do not take place in a permanent retail establishment, to try and address what Mr. Smith, what Deputy Mayor Smith was just talking about in terms of making sure there's no ambiguity, or there's no kind of either disincentive for people to use the JAC for their gala, or a unfair situation where only the jackass to charge sales tax because they're using their space and everybody else doesn't have to. So just limits that exemption to those intermittent fundraising events, kind of regardless of where they occur, but still with those limitations in that definition. So striking which do not take place in a permanent retail establishment. Okay, so if I'm keeping track of this, that would be Amendment Number 4. Is that correct, Ms. Spiegel?

Yes, amendment to the amendment, but right, number 4, I think we're on. Um, Mr. Brooks, did you want to talk to this particular thing?

Thank you, Madam Mayor. Um, and I, I— this would be a question for staff. If, uh, Mr. Steininger's, uh amendment to the amendment went through and that, you know, portion of take place in a permanent retail establishment was taken out, you know, with the definition of the intermittent fundraising event, does that still capture those year-round kind of retail activities from those established storefronts like I had mentioned earlier between St. Vincent's, Salvation Army, and gift shops within nonprofits. Madam Attorney.

Thank you for the question. So I think that by removing the permanent retail establishment piece, we are left with discrete campaigns, galas, auctions, bake sales, or temporary marketing drives conducted by a nonprofit only. So this becomes just those intermittent sales or fundraise sales, services, or rentals regardless of where they take place. Thank you.

All right, Mr. Steininger, do you need to speak any more to your amendments?

I don't think so. Okay, um, any objection to Mr. Steininger's amendment? Ms. Hall and then Mr. Smith. Yeah, I'm going to object, even though Mr. Steininger did say that that would still cover the permanent, um, uh, retail establishment. I, I'm much more comfortable having it in there for getting down to carving out, well, what if, what if the Jack holds a fundraiser there?

You know, I, I think by removing the permanent retail establishment, we're creating a lot more potential for a lot more loopholes or, or I, yeah, I'm just not comfortable that I guess I would like to, you know, maybe it's something we can do more research on between now and the 14th, but I, I think there's, you know, I, I don't know who that's going to really affect except for a discrete incident of a nonprofit holding a gala in their own space. And yeah. Uh, thank you. Mr. Smith.

Objecting for purpose of a question. Sorry, just for clarity, if as originally presented, if there was a raffle that went on for a month that raffle— so yeah, without this amendment, that raffle would need to include sales tax on the sale. And is that— I'm just wondering if by removing the 'which do not take place in a permanent retail establishment,' does that alter the fact that if a 30-day raffle would still have to include sales tax? So It would not change that. The intermittent fundraising events are 14 consecutive days and can occur no more than 4 times per calendar year.

So if it's a 30-day raffle, removing that permanent retail establishment makes no difference. If it's 30 days, it is not considered an intermittent fundraising event.

Thank you.

All right, um, we have an amendment to the amendment and we have objection.

Um, Mr. Kelly. Thank you. Um, Madam Attorney, would you interpret, uh, Mr. Steininger's amendment? Since we're removing the word, you know, permanent establishment, would that also remove the definition of permanent establishment, or would we be adding that for referencing nothing? Madam Attorney.

Well, uh, the amendment was the full amendment, so Mr. Steingar's motion was only to remove it from, uh, number 12B. It did not remove the definition itself.

Mr. Steingar, you want to—. I guess I'll, uh, Amend my amendment and also remove the definition. But we can refer back to it if we need to bring it back at some other point. All right, thank you for that. So again, we have an amendment to the amendment and we have objection.

Madam Clerk, will you call roll?

Thank you, Mayor Weldon. On the motion to amend Assembly Hall— Assemblymember Hall's amendment to strike the statement which do not take place in a permanent retail establishment from Section 12 and strike the definition of permanent retail establishment. Assemblymember Sininger? Yes. Assemblymember Hall?

No. Assemblymember Kelly? Yes. Assemblymember Atkisson? Yes.

Assemblymember Wall?

Yes. Assemblymember Hughes-Scandies. Yes. Assemblymember Smith. Yes.

Assemblymember Brooks. Yes. Mayor Walden. Yes. The amendment to the amendment passes 8 nays, 1 nay.

And so that brings us back to the original amendment as amended. Any objection to that?

Miss Youskandis. Thanks, Madam Mayor.

I will say, when the ordinance got to the assembly last time, I thought the ordinance was in pretty good shape, so I think I'm taking somewhat of a stringent eye on each of these amendments to see what problem it's trying to solve and, and whether I think it does that in a way that is clear and is fair and makes sense. For this, I think there are many ways in the universe of nonprofits to fundraise, and I think if we are deciding as a body to not tax nonprofits, but to tax the sales of nonprofits, uh, just to make that clear, then it's best if we are not picking winners or losers, and we're not picking winners or losers within the flavors of fundraising. So, um, for me, I, I don't find a compelling, uh, problem that this is solving, or I don't find that this makes that ordinance better. So, um, I think even it— we don't know. I—.

The reason I asked about the Girl Scouts is, you know, I don't know how many days exactly, but something like that. It has moved to an increasing corporate, uh, entity where a lot of times now a lot of it's done online even, and it's, uh, less so by the kids in the stores. But, um, to me that's something where obviously, uh, it makes sense. They have the capacity for the customer to pay the tax. So, um, I'll be a no.

Thank you. Ms. Wall.

Thank you, Madam Mayor. Um, I'll also object. Um, You know, to me, this one gets as close as we can to, like, you know, trying to take a burden off, off our nonprofits if this was to go forward. But to me, that's far outweighed by the concerns that Ms. Euskandiz has. This, this just doesn't make any policy sense.

We're just trying to just— we've— some of you have decided that some types of fundraising is good and some other types of fundraising is bad. I don't understand why me as a consumer would pay a sales tax when I go and buy a beautiful painting at, um, a gala, and then, or go buy one at Discovery Southeast. Um, it, it, it's, it's not based in sound logic. So, um, Thank you. We have Mr. Brooks, Mr. Steineger, and then Mr. Smith.

Thank you, Madam Mayor. I'll be speaking in support of the ordinance as amended, and I just want to speak a little bit to, you know, one of the problems it is addressing. And, you know, when there's the retail operations that ball out that definition of fundraising and, you know, sell goods on an annual basis, continuous operation that fund any organizational, administrative, or any multitude of functions within those organizations that, although not, you know, I wouldn't go as far as to say that they're taking food out of any other private entity's mouth, but it does create a level of competition. And the, the issue there is that we take the taxes from those private businesses and through multiple ways they get turned into grants given to partner agencies, and partner agencies or us directly might give it back to those other nonprofits that do have year-round retail operations, which is creating the competition for the private businesses whose taxes are going through them or going to them in one way or another in some capacity. And that just on its face is wildly unfair for, uh, the expectation of private businesses to, you know, I'm sure that they wish that they had taxes being collected from other groups being given back to them, but it's only going one way.

But the same type of activities are being conducted, and that's, that's the type of issue that I see. And it's not something that's unique to Juneau. It's, it's something that happens everywhere. But when it, when it comes to the definitions of fundraising, and, you know, fair competition. I think that this ordinance is addressing an issue that has been going on for decades.

All right, thank you for that, Mr. Steineger. And then Mr. Smith. Um, thank you. And so when I'm thinking about this, you know, I, I'm not thinking about the, you know, the person that's actually purchasing these items. You know, when you think about buying a gala ticket, buying something at a silent auction at an event, you know, I really don't have any kind of sympathy for that person needing a 5% discount of not paying sales tax.

But I kind of go back to the intent I had in my amendment, which was to try to carve out those places where this policy change that we're making would place a significant burden on some of our nonprofits. And, you know, that was— my approach was much broader. This is more refined. And when you look at, like, bake sales and, you know, the mayor mentioned having to wrangle a bunch of kids with a bunch of cash to get that in and try and do that accounting. You know, that's the bake sales, that's the temporary market drives, that's where that burden is going to happen.

So yes, it is much more targeted and maybe it targets some things that I'm like, you know, those auctions, most of them you pay with credit cards who are a little Square reader, that's pretty easy to apply sales tax on. But, but some of them, you know, they're doing cash transactions. They've got a bunch of volunteers working those booths. I think this is much more targeted to those places creating burden. And while yes, these organizations will have to collect sales tax in other areas, they won't get broad relief from this new requirement.

Hopefully this will take care of the parts that are biggest headache for them. And so, you know, even though I'm not sympathetic to the person buying art at the auction getting the discount, I am sympathetic to that nonprofit trying to manage that volunteer base and manage that accounting. And so I'll, I'll support this. I think it's a good compromise. Uh, thank you.

Mr. Smith? I'm good, thank you. Any— Ms. Hall? I'll just also speak to the painting at, at the auction, you know, again, someone would have to determine the worth of that painting, which is always quite arbitrary. And yeah, so I don't see that as the same at all.

You know, I think a volunteer-run fundraiser is far different from a permanent retail establishment.

All right, we have a motion that's amended and amended again.

Um, Miss Spiegel, why don't you catch us up where we are before we vote, and then we'll call roll. Thank you, Mayor Walden. We have, um, a motion as amended, and I'll repeat it. Um, on the motion to amend Ordinance 2026-32 with Assemblymember Hall's amendment which was amended to strike the language in Section 12B, which do not take place in, in a permanent retail establishment, and also strike the permanent retail establishment definition.

Assemblymember Hall.

Yes. Assemblymember Hughes-Scandies. No. Assemblymember Smith. Yes.

Assemblymember Kelly. Yes. Assemblymember Atkisson. No.

Assemblymember Wall. No. Assemblymember Brooks. Yes. Assemblymember Steineger.

Yes. Mayor Walden. Yes, the motion as amended passes, 6 ayes, 3 nays. All right, so that brings us to the motion as amended twice now. Um, Mr. Smith.

Thank you, Madam Mayor. Um, on packet page 76, we have a recommended amendment from the attorney Madam Attorney, can you confirm that you still need this amendment? I'm sorry, I'm trying to read and deal with our changes that we've done. Attorney, thank you. Yes, we still need this.

Um, it's intended— you haven't made any changes to this portion of the language, um, and this is intended to make it more clear to the citizens when they're reading through code. Thank you. With that, I would move the amendment as suggested by the attorney that we can find on packet page 76. Do you want to read it for the public? Yes, it adds the language to the Section A to include the language after the first sentence.

It now further defines, or it— anyway, it adds the language social services provided by an organization that has a current 501, 501, or 501 exemption ruling from the Internal Revenue service and an exemption certificate from the manager, provided this exemption applies to sellers only if the income from the sales— that from the sale is exempt from federal income tax.

That would be great. Madam Attorney, would you speak to your amendment? Sure, absolutely. So if the assembly recalls, Maybe you don't recall. I don't know how many meetings ago this was.

So several meetings ago, social services provided was added to the first sentence. The current, current language reads sales, services, and rentals to a buyer. So the whole clause was supposed to be about sales, services, and rentals to a buyer. So the nonprofit itself, the sales, services, and rentals to that nonprofit were exempt. But we added at my suggestion, and, and I think it was not the best drafting.

We added, or social services provided, and, and so it's just separating out the two clauses into two different concepts. So it's sales, services, and rentals to a buyer that has a current 501, and then a second sentence, social services provided by an organization that has a 501. So it's very clear that those are two separate clauses and two separate concepts. It's purely a drafting. It doesn't change your initial intent.

All right, thank you. Any questions for the attorney? Ms. Hall. And would this, the definition that was provided earlier of social services, would that stand? Would that be used in this as well?

That's right. So what you did earlier is not changed at all. Anything further for the attorney? Okay, we have an amendment. Which amendment number is this?

5, 6?

Doesn't matter, he's gone. It's a 5. Um, any objection? Seeing none, that amendment passes. And Mr. Smith, you have one more housekeeping.

Thank you, Madam Mayor. I would move An amendment to change the effective date of the ordinance. It currently is October 1st, 2026. I know we should do it on quarters, so it seems like January 1st, 2027 makes sense. Or anyway, just obviously not next month.

All right, thank you for that. Any objection? Seeing none, that ordinance passes. I mean, that amendment passes. Sorry.

Anything further on this before we take a final vote? Okay, we have a motion as amended several times. Um, Madam Clerk, will you call— is anybody confused on what we're voting on? Seeing everybody's looking clear-eyed, um, Madam Clerk, will you call roll? Do you have objection?

Oh, do we have it? Thank you, Ms. Hughes-Candies. Do we have objections? Again, this is to move it to the assembly. Ms.

Uh, Wall.

Thank you, Madam Mayor.

Um, yeah, you know, just like, um, this thing is rushed, it's a mess. Uh, we're going to hear from lots of people who were or were not included in this and how it affects them, and that's not how we should be setting policy. So I'm disappointed to see a bill with amendments move forward, um, because I do think the original version we, we came up with was, was fair and made sense. Um, and so I won't be supporting this.

All right, thank you. Um, Ms. Huskandis and then Mr. Steiner. Thank you, Madam Mayor.

I was of two minds whether to object to this or not. As we're just moving it to the assembly, and the assembly, as we all know, buys us that time to continue working on amendments, to continue strategizing about how to change it, uh, on the night itself. But I do want to record just that we sent this back. I believe the version we had at the assembly was superior. I've heard the different ways people are thinking about this and approaching this, and I think it's pretty clear that, you know, and it, it makes sense when you're discussing policy that we're bringing in real-life examples of places we can all know and think of because that helps us think about how those services are provided, what that business model looks like.

But it feels like at this point we're coming up with something that, beyond including some people and not including other people, feels like a targeted— if you have a storefront, we're going to tax you, which is what the original one at the very beginning was. If you had physical storefront, then you were— from now on, you have to charge on your sales tax. And I think it's a complicated dance around, and again, clarity, ease of understanding why we make the carve-outs that we do, but also fairness has to be at the heart of our tax policy. And I think we are pretty across the board with businesses, for-profit entities, and It just makes sense to me that we would do the same with nonprofits. So I will say that part of me is still— I'm not sure that it's worth objecting just to send it to the assembly, but also it maybe is worth objecting at this point because I feel like it's been poison-pilled now where I don't know if I can bring myself to vote for that because I don't believe that our policy should be targeting some nonprofits and leaving other nonprofits alone.

If we're gonna tax the customers who are, uh, buying things from these nonprofits, then I think we've got to do it across the board. Um, so I'm not sure how I'll vote, but I, I do want to say I'm disappointed in where we landed.

Oh, thank you, Miss Hughes-Cannies. And who else had their hand up? Mr. Steiner.

Um, thank you. And, and I only raised my hand because I just kind of wanted to make the point that I don't, I don't feel like this has been a rushed process. Um, you know, shortly after the ballot initiatives of last year passed, you know, we saw the need to look at all of our, all of our revenue exemptions and our foregone revenue. This was part of that process. You know, it's been discussed in committee.

We made deliberate choices in committee of what things to rush and to fast-track and what things to hold on to for a little while so we could ruminate on them longer, think about them, and then come to a meeting like this and have a very robust debate and discussion on all of the implications and how it impacts individual organizations within our community. And we're going to keep moving and we'll have public comment. And it's been, you know, almost a year from kind of idea genesis to it getting to the actual assembly table. And so I don't feel like it's rushed. Yes, we did a lot of work tonight, but that work is built on thinking about this issue for months, hearing from community members and getting emails for months.

And, and I don't feel like this is rushed policy. It's just a lot of different ideas, a lot lot of different ways to address the same issue of are we creating problems for our community through enacting this policy? And I think that Ms. Hall's amendment does a pretty good job striking the balance in carving out places where this policy could create harm to organizations. And so I think it's a good compromise between that, that big and broad, which I agree, you know, it's the broader you can be, the better, you know, less picking winners and losers from the dais. Versus kind of a very specific here's who pays and here, here's who doesn't.

We've just identified, you know, 1, 2, 3, 4, 5 different types of activity by nonprofits that we're not going to tax, and we have left every other activity by nonprofits that's, you know, sales, sales related, you know, not donations of course, but sales related that we will tax and And so I think this is, you know, an example of a long process that, you know, not every step of it is, you know, assembly meetings. A lot of it is emails and meetings with organizations, but it has taken us quite some time to get here today. It has not been rushed. Well, thank you, Mr. Steineger. Anybody else?

Mr. Brooks and Ms. Hall. Thank you, Madam Mayor, and I just want to say that I I truly believe that this is sweet, simple, and fair to the point. And, you know, keeping tax code as simple and clean as possible, it should always be a desired outcome. The—. There's precedents set by different organizations.

I believe that the IRS had a ruling on Diepacks Gift Shop And, you know, that was ruled as not fundraising. And this all goes back to nonprofit activities. Nonprofits fundraise, but retail operations with permanent outposts is not fundraising. And that's not just something that we're deciding. That's something that's been established already.

And this is addressing where that discrepancy is in a, in a very practical way, I believe. Thank you, Mr. Brooks. Ms. Hall. Thank you, and I'll just speak one last time. And, and, um, don't know that I agree with, uh, it is fundraising if you have a retail establishment, you know, you are providing funds for your, your mission.

Um, but however, you know, the, the notion that we're targeting some and not others, you know, that with the intermittent, intermittent fundraising, um, exemption, that, that is open to every nonprofit on that 263 list of nonprofits. So I feel that that is fair, and, and I look at those that do have more of a permanent retail establishment as partners with the city in collecting additional revenue, primarily from the general public, tourists, And I see this more as a partnership, not, you know, we're punishing you. But, you know, if you have a large retail establishment, it's a little easier to collect that than a parent-run fundraiser selling gift wrap or whatever. So anyway, thank you for considering this. And yeah.

All right. Thank you, Ms. Derkellen.

Thank you. I don't have any strong feelings of support for this ordinance. I am not sure that I will vote for it when it comes before the assembly. I still need a little more time to think on that regard. But, um, I think this ordinance is improved over what it was.

And so at this point, I, I think it's acceptable to move forward, but I'm not sure how I'll will vote on the final ordinance. Uh, thank you, Mr. Smith. Thank you, Madam Mayor. I guess I just wanted to chime in a little bit. I guess the, the amendment, as I see it, at least this intermittent fundraising activities, I don't necessarily see it as us picking winners and losers in terms of organization.

I feel like we're addressing at least part of an issue. I do know raffles sometimes go longer than 2 weeks, so don't know what to do about that. But just that certain types of activity are just inherently more challenging to account for, to, and, you know, to be able to actually collect and to collect sales tax on, and possibly to the point that they would just, you know, it does then start to cut into the revenue collected by the nonprofits because they're not going to charge, you know, $1.05 on a cookie. They're just going to charge $1, and they're going to then— they're only going to get, you know, $0.95. So I see us kind of more addressing inactivity versus, you know, organizations.

Thanks. Thank you, Mr. Smith.

Okay, seeing nobody else, Madam Clerk, we have a motion as amended. Please call roll.

Thank you. On the motion to move Ordinance 2026-32 as amended to the full assembly, Assemblymember Smith. Yes. Assemblymember Wall.

No. Assemblymember Kelly. Yes. Assemblymember Hall. Yes.

Assemblymember Atkisson. Yes. Assemblymember Hughes-Scandies. No. Assemblymember Brooks.

Yes. Assemblymember Sininger. Yes. Mayor Walden? Yes.

The motion passes, 7 ayes, 2 nays. All right, before we go to a break, uh, um, to eat, uh, the dessert made by Ms. Hall for Ms. Wall and the cake, the lovely cake made by our finance director for Ms. Wall. We are sorry, Ms. Wall, on your last finance meeting that you're sick. But we're going to enjoy that. Um, and you've done— uh, as people were a little surprised when I pulled you out of the crowd to make you a finance chair, but one thing you have done for us, and I had complete faith in you doing, is helping us with process.

So I'll leave that because I know the finance director wanted to say a couple words.

Thank you, Mayor Walden. Um, so yes, in honor of, uh, Assembly Finance Chair Wall's last AFC meeting, um, we debated what to do in, um, recognizing her, um, acute attention to process and planning and wanting to make sure that hard decisions were, were set up in a way that good conversation could happen and Good information could be shared. It was suggested that we make a processed cake, which I don't really know what that looks like. So after much debate, we decided the process was that it's an angel food cake and strawberry shortcake. So we have a homemade angel food cake, strawberries, blueberries, whipped cream, because angel food cake requires egg whites.

I have a lemon icebox pie recipe that requires egg yolks, so there's also going to be some pie out there for you. And Miss Wall, we will make sure that someone brings something to you so you can still enjoy it even though you're not here. Please take a photo before it gets eaten too much too. Okay, we will do that. And then since we've been going for 2 hours, we'll take how much time?

10, 10 Minutes.

We will bring the Assembly Finance Committee back to order. Okay, that was one item off of our agenda. Item 2 on our agenda. Madam Mayor. Yes.

Can I, can I do something on that previous item? Certainly. I don't know if it needs to be a motion, but I guess a request. And staff, let me know if you would like this as an actual motion. Well, I could give it a shot first, then you can tell me.

I would just ask staff to attempt some targeted outreach to nonprofits, maybe like using reasonable means, because I don't want you to like cross-reference things with like the IRS database and have to like look up every email address from, you know, for every nonprofit in Southeast Alaska for this, to inform those nonprofits of ordinance language and the date of the upcoming public hearing.

Would you prefer that as a motion?

I, I'm, I'm fine with that direction.

I wouldn't think any assembly member has an issue with it. So, um, also for the record, um, Ms. Youskany was also not feeling well, so she has left us. Um, so we are down to 8. Um, with that, uh, Madam Finance Director— oh. So, Madam Manager, thank you.

Uh, the next item we— staff is just requesting some assembly direction, uh, from. So I would love to get a motion from you just to, to clarify, uh, the status on one of our community grant partners. So, you know, we, we have many partners, and Juno Arts and Humanities Council is considered a partner agency for CBJ because it has a long-standing relationship with providing services to the community on behalf of the Assembly. As part of that, we execute an MOA every year that just spells out things like grant reporting requirements, how much money can be used for operational expenses, and other legal terms and conditions. So that's our normal process.

Most of these grant agreements are the same every year, as was with Juneau Arts and Humanities Council's grant. And historically, they have requested about 30%, a split of 30% administrative overhead and 70% direct grants to artists and other nonprofits and supporting art agencies. And that's— those grants are detailed in the memo. This year, when we went to work with the JAC on that MOA, they requested more operational flexibility in more overhead less, uh, less direct grantmaking. And they did give a presentation, um, on the March— at the March 4th Finance Committee meeting, talking about their kind of overall strategic plan and their focus on sustainability and stability.

So trying to really kind of, uh, work on their, their budget and their finances. Um, at that meeting, it was not clear to staff that the Assembly had given, you know, approval of of kind of this different split between direct grants and administrative overhead. And we just thought that this was the type of thing that would— because you'll hear, you may hear from those granting agencies, and we just wanted to kind of do a check-in on kind of shifting that formula to allow Jack to, you know, be more fiscally stable in the short term. And it would be great if you could do that in a motion, and it would be great if you could, uh, signify if that's a one-time or ongoing. Happy to answer any questions.

No, thank you. We also have, um, the JAC Executive Director Maggie McMillan and the Board President, uh, James Bibb here to answer any questions. So Let's start with questions. Who has questions?

Seeing none, we'll go to Mr. Smith.

Oh, Mr. Steininger. I guess I would just ask, you know, aside from looking at who received grants last year from some of these artist grants, is there a way to know kind of what grantees in our community, what of these art nonprofits you know, who would be deprived of grant funding effectively if we allowed this transfer? Is there a way to know that, or is that kind of completely undetermined at this point?

Madam Finance Director. Um, thank you for the question, Mr. Steingart. Um, I— we are not in a— we as finance staff are not in a position to say these grant— these grantees are going to get awards or not get awards. Um, I think consistently over the years that I've heard the JAC presentations, they've consistently had more applicants for grants than they've had the ability to fund. So, you know, obviously there are experts in the room that could probably answer more specific and direct questions, but that's been a consistent theme in the few years that I've seen presentations.

But as far as artist A, B, C, or D, we wouldn't have insight into that. That's Part of the, the grant and request that the Assembly has made of the JAC is, is that the Assembly wants to see funds out, out to grant artists, and you want the JAC to provide that service, as opposed to when you do your Assembly grants, having Artist A, B, C, and D petitioning the Assembly for grants through your normal community process.

Thank you. And actually, before we go to Mr. Smith, I do have a question. If Miss McMillan would come up, um, my question is, um, I see— and this is where there are— it was an interesting conversation because I remember, um, thinking, at least in my head, which probably totally in my head, that when we voted on this, you were talking about kind of restructuring and everything and a year of turmoil, and, uh, and that's what I thought I was voting on. So would you tell us why you're having a different breakdown than normal? Not breakdown of money than normal.

So the first time I was able to present to you all, I was 2 months into my role, and I found the previous executive director's asks over the last multiple years, and I thought, oh, this is what suits the JAC, and we should do that.

A month, 3 months into the JAC is when I realized that our finances were not stable. 4 Months into the JAC is when I started letting go of our employees. We've made some really hard decisions, and I think we've done a really good job making those difficult decisions, but that's why it's changed, right? When I came in, I was not as well informed as I should have been when talking to the assembly, and on me for being a brand new ED. But once I did realize it, I made it a point to come back and speak to you all very open and honestly about our entity and the position we were in.

I am happy to say that we have made some hard decisions and we are on better footing than we were before, but it's still definitely a reorg, rebuild, stabilize year for the Juneau Arts and Humanities Council.

Mr. Smith. Thank you, Madam Mayor. Thank you, Miss McMillan, for the honesty here. I wanted to just ask, if we don't ship this, could you just speak to the impacts? And then the other would— and then another would be like, how— what kind of timeframe are we looking at this being?

A perpetual thing, a year or two? So the goal is to only ask for this one year. I'm in the process of working on 4 grants right now that are going to help us be more stable and more independent moving forward. That is one thing that is unique about me as a nonprofit ED is that I look at our assets and figure out how we can use them as like I run it like a business, right? So this should be a one-time ask.

If we do not get the funding, we will probably lose our whole education department at this point. Point. I don't know if you guys realize that we put 13 artists in your school district on average every year to teach children. It's a, it's a huge benefit. Your school district doesn't pay for it, we pay for it.

We also bus around 1,500 students each year to field trips that are art and culture related, and those things will, will inevitably either be cut or greatly reduced. Um, from my perspective, I don't know how I can cut the jack any more than I've already cut it. Um, it would be changing our mission and changing what we do to the community, or for the community, if we have to keep making reductions, which, if that's the wish of the assembly, then that's something I can go back to my board and look at. But it's not, um, That's it. If we're not stabilized this year, we can't continue to be the partner that we have been.

Uh, Mr. Steininger.

Mr. Kelly, do you have your hand up? I'm sorry, Mr. I did, but when Mr. Smith asked two questions, one of them was mine.

Got it. Mr. Steininger, you're welcome. Thank you, and thank you for coming, Miss McMillan. Um, I'm wondering if you might be able to comment a little bit on the the question I asked of Ms. Flick and can maybe give us a bit of an idea of what the impact on, you know, other art nonprofit, other artists in Juneau and kind of how critical to their programming is the funding that gets regranted through the JAC. So, belim.

Last year we granted out to 14 organizations. Um, those grants were between $5,000 and $15,000, I believe. So, um, and my new plan that I would be presenting to you all, we would do 11 organizational grants at $5,000 this year. I will say, if you look at the overall, like, what percentage our grant is to most of these entities' operational budgets, most of them it's less than like 5%. There are places like the Makerspace That was 45% of their operational budget that comes from us.

Um, I will tell you, as someone who applies for grants, grantors don't like giving money to people who rely 45% on their overhead on one grant. So my goal for people like the Makerspace isn't to cut all of their funding, it's to reduce their funding and then help teach other art nonprofits how to apply for grants outside of the city as well.

Any further questions?

All right. And Mr. Bibb, did you have anything to add? Okay. All right, uh, Mr. Smith. Thank you, Madam Mayor.

I move that the assembly direct staff to amend the JAC MOA as drafted, I guess, in the planned amounts, um, column.

So is that clear to staff? Oh, excuse me. Thank you. Um, I'll, I'll just say one time. Yep, FY27.

All right, so we have a motion. Any objection? Ms. Wall?

Thank you, Madam Mayor. Um, I, I have to object. I, I, um, you know, have a lot of empathy for where the JAC is, and it's, you know, hard to hear. And I really appreciate all the work that Ms. McMillan and her board have been doing to, to try to figure out a sustainable future for, for the JAC. But, you know, I wasn't here when this, you know, grant was initiated originally, but I have always been under the impression, and has been, you know, my intent and I think others on the Assembly's intent, that, you know, that's similar to how we treat funds with JCF and others, that this is a way that we can grant to organizations without having to be the decision maker between a bunch of similar organizations.

And so I do fear that by taking this path, we will kind of ruin that structure that we have, and we will start hearing from other arts nonprofits that also are in desperate need of support and are just as valuable to our community. I think for me this grant has been about supporting our arts community broadly and not just about supporting the JAC. So if we were in a different financial position, I would be very happy to provide an additional grant to the JAC on top of this, and maybe if we find ourselves in a different financial position— I know we're going to talk about our sales tax numbers here, which are looking better than expected, then, then I'd be considered that. But, but without that information yet, I, I can't support changing that well-trodden path that, that this grant process has been on. Thank you, Ms. Wall.

Mr. Steininger, did you have a comment? Um, I, I feel very similarly to, uh, to what Miss Wall just said. You know, it's— but it's challenging because I— the, the repercussions of not allowing this change are pretty significant, and significant for our school system. Um, you know, and even though kind of play a read between the lines of the previous speaker, I I doubt she'll support this amendment, but I'll object for the purposes of an amendment to add that we— to instruct staff to draft an appropriate ordinance to backfill the $80,000 in grants to the other art nonprofits and ask for unanimous consent. I can give a little bit of logic to that.

So when we made this appropriation, that was the purpose, and, and this change is, is taking money out of the hands of our intended recipients, and I, I don't want to take that lightly. Um, I think the need for the JAC to make sure that they move forward properly is, is probably the more urgent need, and so having an ordinance coming through where we can have that debate about You know, making good on the promise we made when we passed the budget. I think we kind of owe it to those grantees that we have that conversation. Maybe in the end of that, you know, if the sales tax presentation is not as good as it looks on paper, if, you know, things change a little bit, you know, that gives us about, what, 2 months or so to make that decision and have that discussion. But I do think, you know, we made a commitment in our budget in one direction.

You know, changing it is, is kind of picking some winners and losers after the fact, and I'd be a little more comfortable if we continue to have this conversation where we could talk about, you know, how do we make good on that promise. Thank you. Thank you. Any other comment? I'll speak in favor of this motion.

Um, I hear what Ms. Wall says, but And I hear what you said, Mr. Steineger, but I actually think that's put us in a little bit weaker position. Mr. Smith's motion was for 1 year, and like I said, I initially thought that's what we were voting on when we voted on it this spring, to give them a time to reorganize. But I'm afraid if we do an additional grant, we're going to have other entities come and ask us for additional money. So I would rather give them 1 year of trying to recover, and they are a little bit different entity. Not only do they provide provide, um, programming for the school, but they also run our Centennial Hall.

So I think we can give them a chance to run our Centennial Hall without cutting their staffing for that, because I would guess that they aren't going to be able to run the Centennial Hall if we don't allow them to have some reorganization. And I strongly agree with Mr. Smith's one year. Was that an objection to my amendment? I think it was. Sure, yes.

Any other objections to Mr. Steineger's amendment? The point of order, Madam Mayor, should, should that be its own amendment after we vote on mine, or are you guys—. I'll look for the attorney. Should that be an amendment or a separate because it is different.

It's up to Mr. Steiner what you would like to do. Are you attempting to amend the original motion, or are you attempting to do something separate? I'm attempting to amend the original motion into something that I'm more comfortable supporting. So it is an amendment to the original motion. All right, thank you.

So I object to that amendment. Ms. Well, I'll support this amendment. Um, you know, I'd rather see it kind of in the, I guess, maybe the opposite direction in terms of fund the other nonprofits first, and then if we feel like we have money, um, provide the JAC an additional, um, dollar amount. But, um, I think regardless this is gonna have to— well, now, now I guess I'm confused about the process for it. So The most— maybe that can be clarified for me.

If this amendment was to pass and then the ordinance was to pass, what does the forward progress process look like for the assembly?

Who's answering that one? They're all looking at each other.

Um, Madam Finance Director. I, I will take a shot at that. Um, so if a motion is passed that includes Mr. Smith's, um, direction to rewrite the MOA to include the breakout in funds according to the Jack planned amount in the memo, and to make that a one-time adjustment for FY27, and it also includes Mr. Settinger's amendment to draft an ordinance to do an additional $80,000 to the JAC for the purpose of major grants, individual artist grants, and Catalyst grants, the, the ones that are impacted.

That could be introduced, I believe, still on September 14th as an appropriating ordinance. It would have to have public hearing and action then on October 26th. And we could either wait to do the MOA as, as one adjusted MOA for $282,000, um, to the end of October, or we could draft the MOA per the adjustment that Mr. Smith has suggested, assuming the other ordinance passes, amend the MOA for the $80,000 as suggested by Mr. Steininger for the major grants, individual artist grants, and catalyst grants. If we, if we do the second way, so we adjust the MOA, um, I would expect the JAC to be okay with that. And with that signature approval on the MOA, we could then issue the funds.

If we want to wait until the ordinance adding another $80,000, that means, um, that wouldn't come into play until the end of October, um, for them to review and us to sign off on and then to fund. So we could do it either way. I'm guessing we would probably want to amend the MOA, get that signed, let the ordinance play out assuming it passes, amend the MOA, and do a second issuance of funds. Okay, I will have to say that I'm still confused on this one because Mr. Smith was to go with the planned amount. So that's—.

So I don't—. Yeah, go ahead, Madam Manager. Thank you. Um, what the amendment to, uh, Mr. Smith's motion does is it, is it says move forward city staff and Jack with the, the Plan B for the Jack that allows them is what they're asking for and allows them to be whole and postpone debate on do we backfill all of those grants so that Jack can provide full funding to their grantees at after this ordinance passes and it basically separates that debate. So you allow the Jack to move forward and then separate the debate on additional funding.

Thank you, that was helpful. Everybody got that now? Okay, so I'm going to remove my objection then because I understand fuller. Any objection to Mr. Steingart's amendment?

Seeing none, that passes. So we're going back to the main motion as amended. Any objection? Ms. Wah. Thank you, Madam Mayor.

I don't—. I think I already spoke to my objection, but—. All right, Madam Clerk, we have objection and we have, uh, sorry, we have a motion as amended and objection. Please call the roll. Thank you.

On the motion to direct staff to amend the FY27 JAC MOA funding breakout as requested by the JAC as a one-time change for FY27 only. As amended to direct staff to also draft an appropriating ordinance to grant the JAC an additional $80,000 for major individual and catalyst grants. Assemblymember Smith? Yes. Assemblymember Wohl?

No. Assemblymember Brooks? Yes.

Assembly Member Steininger. Yes. Assembly Member Hall. Yes. Assembly Member Kelly.

Yes. Assembly Member Atkisson. Yes. Mayor Weldon. Yes.

The motion as amended passes 7 ayes, 1 nay.

Thank you for that, Ms. McMullen, and we will move on to our third item, HESCO funding and transfer. Who's taking this? Madam Finance Director. Thank you, Madam Mayor. Um, there were two ordinances introduced at your last meeting related to HESCO barriers and the capital projects.

And, um, and so I just want to take a moment to explain them to you, um, answer questions, and then, um, if you all are comfortable with those ordinances, request that you move them to the full assembly for their, their public, um, testimony and action. So, um, the first ordinance is 2026-01_bD, and what this does is transfers funds out of the original capital project, which was, as you recall, set up by the idea of doing a local improvement district for those original homes that were protected by the first set of HESCO barriers. Part of that ordinance said we want to set aside $500,000 for when we take all the HESCOs down and we want to have a grant program that allows those homeowners to apply for a grant to basically restore, um, restore things that had to get adjusted because of the HESCO barriers. So those funds lived in the capital project because everything around the lid just kind of lived in the capital project. So what this ordinance does is it takes the funds out of the capital project.

We're going to put it in the lands fund because that's the most appropriate fund for it. We're going to restrict it and hold it there until such time that the HESCO barriers come down and the grant program is defined and enacted. So that's what the first ordinance does. Any questions on that one? Any questions?

Okay, thank you. Uh, Mr. Smith.

Thank you, Madam Mayor. I move that Ordinance 2026-01B-D be moved to the full assembly for public hearing and action at the next assembly meeting. Any objection?

Seeing none, that ordinance is moved. Madam Finance Director. Thank you. So the second ordinance, um, that was introduced is Ordinance 2026-01_bE, and, um, what this ordinance does, again, going back to that original capital project that was set up that was based on the LID, um, I, as, as the manager said multiple times, I think on Monday night at the Committee of the Whole, things change a lot. Um, one of the things that changed is we were able to take advantage of DEC funding through the state revolving loan fund that came with 50% forgiveness.

Originally, that work was going to have a cost split between the homeowners and the city, and so general funds and sales tax dollars went to that capital project. We got the DEC funding that also went to that capital project, and as the as the manager talked about way back on May 4th, which was a really long meeting, that, that general fund and sales tax that got put into the capital project originally is intended to repay the DEC loan when that payment comes due. It's inappropriate for that cash, if you will, to just live in the capital project. Like we need to move on from the capital project, get that closed out. So what we're— what this ordinance does is it transfers those funds from the capital project over to our debt service fund, where again it will be set aside, restricted for our future loan payments.

And so it's just, um, uh, putting— ring-fencing, I believe, is the word that the manager has used often to to, um, to put that— those funds away that we know we have to make that repayment, taking them out of the capital project and setting them aside in our debt service fund where they'll be, um, restricted until it's time to make those payments to DEC.

Thank you. Any questions? Mr. Steineger, um, are we accruing interest on that debt to DEC now? Like, could we just send it to them and pay it off now and not accrue any more interest, or Am I not understanding the loan? Madam Finance Director.

Thank you for that question. Um, you know, DEC loans are really interesting on when, when the project that they're funded is considered substantially complete. Um, and because the original DEC loan was amended to include the larger section Phase 2 additional, whatever names you want to use for it, the additional Haskell work that was done this year. Um, I don't believe that we've triggered that substantially complete, and we're— finance is working with Public Engineering Public Works on, you know, documentation that's going back to DEC and when that loan repayment will start. Um, my experience with DEC loans is they don't love it.

To get repaid all at once. Um, I, I don't know that if that's an option, but we can certainly have that conversation. But we do have the funds set aside for, for that repayment. Any further questions? Seeing none, Mr. Smith.

Thank you, Madam Mayor. I move Ordinance 2026-01 lowercase b capital E uppercase E to the assembly for public hearing and action at the next assembly meeting and ask for unanimous consent. Any objection? Seeing none, so moved.

Next, we have sales tax update. Madam Finance Director. Thank you. Um, I feel like I should be super excited when I give you, um, exciting revenue news, but I know this also comes with some hand-wringing. So what you have in your packet on page 86 Um, is our estimation of where we thought our FY26 sales tax was going to be as we started the budget process.

And so these forecasts were developed in February, presented to the assembly in April with the budget process. Our FY26 budget was $70 million for sales tax. We had seeing soft sales tax the first couple quarters, and so we forecasted that we would have $67.3 million in sales tax. And then we had the election and the sales tax exemptions, which, as we've talked about many, many times, we didn't collect discrete data to know exactly what those exemptions were going to be, and so we estimated estimated that with, um, basically a half a year worth of exemptions, our revenue would be at $61 million. Again, at that time, only 2 quarters had happened.

We were at $35.6 million. So when we talked about, um, you know, how we did when we got our first quarter of data— this was like the night you guys were making your final FY27 budget decisions, um, we had just gotten the January, February, March sales tax data in, and we actually came in very close to our budget. What, um, what that meant from an exemption perspective, we had anticipated that our exemptions would be $2.7 million, and we actually realized only $2.3 million of a reduction in our revenue due to the exemption. So we talked about that back in May, but I just wanted that as a background. Moving on to page 88.

So for April, May, and June, so the quarter ending June 30th was due to sales tax on July 31st. So we've just recently kind of finalized what that quarter looks like. I'm gonna happily tell you that the sales were strong. But I will tell you that sales were strong, mostly due to inflation. Um, and so we, um, we ended up bringing in, um, enough sales tax so that, um, the expected exemption was made up for with higher sales.

And, um, when we look at the actual exemptions again in this quarter, we thought we would have $2.7 million worth of exemptions. Exemptions, we only had 2.2. So our, our estimates on the exemptions have been pretty close. What has been surprising is the strength of sales, which has been primarily fueled by inflation. So if you remember back in February, we hadn't started a conflict with Iran, and that has really spiked gasoline.

You all know that when you fill up your own vehicles. But think about how everything comes to Juneau. It comes in on a plane, it comes in on a boat, it's using those consumable fuels, and that means the price of those goods once they get here also increases. And so when we, we were surprised at how strong the sales, sales tax dollars were, but when we looked at it, it was really those industry types that are driven by transportation-type costs that you could really see a spike in the sales. The other thing I'll say is that we, we base our forecasts on historical performance and what we know about the future, or what we expect about the future.

And if you'll remember, last summer we had a new federal administration, people were losing jobs, government contracts were being cut, grants weren't happening, I don't know how you felt about folks wandering downtown. It didn't feel like downtown was very busy, even though we had the same number of ships and tourists as we did the year before. Whereas this summer it feels like people getting off the boats. I'm seeing more bags walking around with people as they're cruising downtown, so we're seeing stronger numbers as it relates to you know, the, the summer increase of visitors as well. So there's, there's a number of things that created the strong sales.

If you want to go to the annual picture, Adrian, on 89, this is basically what our sales tax looks, looks like for the year. We're still closing out our books, so when we do our year-end review at our next meeting, this, this may look slightly different but not significantly. Again, we budgeted $70 million. We thought we were going to be at $67.3 million given the soft sales. With the exemptions, we thought it would drop down to $61 million, and we actually came in really close to $67 million.

And so, um, we're about $3.2 million short of our budget, but we are about $6 million higher than we expected given the exemptions. I do want to talk about the exemptions for just a little bit. So we have 6 months worth of data now with exemptions being recorded as merchants are submitting their sales tax information. For our food exemption, for 6 months it has been a revenue decrease of, or forgone revenue, I guess, of $3.6 million for 6 months. So if we double that, if we assume that January through June will have about the same revenue as July through December, we would see about $7.3 million of revenue loss due to the food exemption.

And on the utilities front, 6 months has been just under $1 million $1.8 million. So again, if we think that January through June will look about the same as July through December, um, overall we'd see $1.9 million in revenue loss for the utility. So in total, about $9.2 million of a revenue reduction due to the exemptions that were passed last October. And if you recall, we were predicting about $11 million, so $1.8 million off. Which, you know, in our larger sales, you know, $70 million is, is not bad to be only $1.8 million off on that kind of an expectation.

So we are seeing the exemptions behave as close to how we would expect. But the certainly the inflation, which I don't think is going away, and, you know, just the the, the price of fuel, and you know, that means airfare is up, everything coming in is up. Um, I think as like, what does this mean for our future? I didn't give you a new fund balance report for many reasons. The biggest one is we're still closing FY26, so that's coming, but it's not, it's not ready for prime time yet.

Um, but as we look to FY28 I mean, these numbers are, um, you know, it kind of makes us feel good about our revenue, but at the same time, if inflation is driving up sales, it's also going to be driving up our costs. And as we look at FY28, we know that we've got larger increases for wages per our negotiated agreements, and we'll have to look at how, you know, these various price drivers are affecting the city's expenses as well. I mean, just in the most basic of, of operations, where we've got street sweepers and bulldozers and police cars and fire trucks running around that are consuming fuel and having to buy, you know, at higher rates. That's something that we'll look at as we start talking about the FY28 budget. Um, I'm happy to take questions.

Um, but that is the report on sales tax, literally as they came in last week. Oh, thank you for that. Who's got questions?

Miss Wall. Thank you, Madam Mayor. Um, is there a— this is— is there a way to, like, like, how do I say this? Do we know it's inflation versus strong economy, or is that just like a theory based on the world state, or like, do we have inflation numbers for, you know, the economy? How do we— how do you kind of say that's what this is?

Madam Finance Director. Thank you for the question, Ms. Wall.

No, we don't, we don't have, we don't ask our merchants to tell us about their sales and how much inflation is driving their cost. But when we look at the industry types, like transportation and freight is an industry type, and we look at how that sale, their sales changed from April through June this year versus April through June last year, you can see like a marked difference. And if you look at other industries, you see not quite as big. And so that, that's what leads us to that. And, you know, us all watching our own price increase at the pump when we fill up our vehicles.

Like, we know that that's one of the big drivers. Inflation is certainly talked about in economic circles. It's something that, you know, I hear when I'm getting economic updates, whether that's, you know, just through newsletters or through, you know, sitting on the AMLET board and getting, you know, the kind of their, their take on what's going on in the economy. You know, the Feds are also talking about inflation and how that You know, one of their primary directives is to make monetary policy that's to help keep inflation in check. And that's, that's an area they just had their Jackson Hole meeting where, you know, they're concerned about that.

And, you know, they didn't come out and say we're going to do this, that or the other. But it is definitely, it is definitely what's being talked about in the financial world. But I don't, I don't have a specific metric. Ms. Wall, that I could point to and say this is inflation here.

Thank you. Mr. Steininger. Thank you. And I, I see one of the footnotes on, I think it was slide 3. Yeah, where it says caution following up with some merchants not showing any exemptions.

Um, that's still the case. There still are some vendors that you would expect to be giving exemptions that you're just not seeing come through. Is there— do you have an idea of kind of the size of that unknown? So in full disclosure, I just pulled this directly from the main presentation. I didn't change the footnote.

But that's a great question, Mr. Steininger. We do—. We have been working consistently with merchants where we feel like they should be showing exemptions, or, you know, maybe they're— we still have people that are reporting the senior exemption on food. Which I guess is fine. It's still a thing.

It's still in our code, but really it's probably just the regular food exemption that should be recorded. So we're working with merchants on where we can spot like, why aren't they showing this? But I think that, you know, the first quarter of it, January, February, March, we had a lot. I think we're feeling better about how folks are reporting and, you know, extending the exemptions appropriately.

Mr. Steineger, follow-up? Yeah, yeah, kind of, kind of a follow-up and broadening of that. So we've had a lot of changes to our sales tax code between what we've done here at the body and these. Do you feel like you have, like, a good handle on the education piece? Like, I mean, I guess, yeah, it's a lot of change for our vendors to deal with, you know.

How do you feel the education is going? Thank you for the question, Mr. Steininger. I am, um, eternally grateful that a year ago in the budget a communications department was added to, um, the manager's office. I do feel like perhaps I'm overutilizing them. If you think about all of the budget work that was done last year.

But they've been a great partner. Lots and lots of changes have happened and will take effect on October 1st, right? That's when a lot of the sales tax effective dates are. And so we have worked with our communications team to, you know, update a site that's specifically about here are all of the things that just changed, as well as updating kind of the regular places that our merchants know to go. To like, what does that actually mean?

And so we try to put words and examples in specific directions to the various pieces of the sales tax code. So how do I feel like education is going? We're doing as much outreach as we can. I think there will be a learning curve over the next quarter for sure.

We're doing what we can to get the word out there. Both, I mean, merchants register with us, right? So we've got contact information. We send things out directly. We do a lot of email.

And yeah, just trying to get that word out there in as many ways as we can. And not, we've also been very broad in our education. So sometimes we know if there's if there's been a change that really affects these 10 merchants, we can do very targeted reach out to those merchants. Because there are so many changes in so many areas, we've gone with just a broader approach and said, you need, you need to go check out what's happening. There's been a lot of changes.

Thank you, uh, Mr. Brooks, and then Ms. Wall. Thank you, Madam Mayor. Um, this is—. It is definitely good news to see. You know, I'm curious, uh, if we're— if you guys have recognized or noticed a similar uptake in trends or forecasts on the property tax side of things as well, or if that— that there's enough new data available.

Um, thank you for that question, Mr. Brooks. Um, we, we haven't dug into the property tax side yet, like from, from my perspective, trying to, to crystal ball what's going to happen next year. We'll start those conversations soon. The assessor's office right now is out doing canvassing. They're doing updating of property.

They're always, you know, sales data as it is shared is incorporated. But at this point, I've not asked them to aggregate information to kind of get a feel for, you know, our, our do we feel like property value is increasing or decreasing? Um, I will just tell you anecdotally from, you know, doing my own browsing, it seems like there's a lot of properties that get on the market and go pending really fast. So I don't feel like we're in a crazy— what was it, 2020, '21— where like if you didn't make an offer on a house within the first 30 seconds, you weren't getting it. Like, I don't think we're there, but I think the market's moving And it'll be interesting.

Last year we didn't have a ton of growth, just a little bit, and I would just guess my gut feeling would be about the same, but we don't— we haven't looked at it. We don't have the data yet.

Miss Wall.

I think my question was answered. Thanks.

Any further questions?

See none. We'll move on to debt policies. Fantastic topic. I'm sure we all read our 18 pages. Thank you, Mayor Weldon.

I am sorry to give you such riveting reading. Um, our bond counsel and our municipal advisor, um, worked really hard to put together two policies that are designed to do a few things. One is sort of an educational piece. You'll notice that in the first debt policy, there's a lot of reference to our charter and a lot of reference to our code. It kind of puts a good context around the things we should be thinking about when we take on debt.

On debt. One of the things that, um, has been hard for me to wrap my brain around is when our bond counsel uses the word bonds, I immediately think general obligation bonds, revenue bonds, a very specific maturity, 30 years out, whatever. And really, it's any debt. So the DEC loans that we have from— for the Hesco barriers, if we take out DEC loans for utilities those are all in the debt policy kind of referred to as bonds, and we tried to clean it up to be more general to debt. But that's in their— in our bond counsel's world, bond is debt.

It didn't matter to them, and I'm like, it matters to us. So we tried to do that.

One of the things that the policy calls out is, you know, just the different kinds, whether it's general obligation, obligation, which is really like our HESCO barrier loan from DEC is really a general obligation debt because we are using general fund dollars to pay it. Um, the charter allows us to take on debt in that way in response to a disaster. So I think like for from the whole, and, and we can do that without under a disaster without a vote. Um, whereas when we talked about if we wanted to put a utility bond on the election or the school bonds on the election, you know, those are not in response to a disaster, and so we would want to get voter approval. Um, revenue bonds— we have a few of those, whether it's from the hospital or using the marine passenger fee group of revenue for port bonds.

So those are, you know, just where we've got specific revenue coming in that's being pledged to make it. There is some testing that we ought to be doing before we take on bonds or any kind of debt and making sure that obligations that we currently have called bond covenants are, are being met. And will they still be met if we take on new debt? So what I like about the debt policy is it really lays out a good framework of all the things we should be thinking about when we go to take on debt, and, and that usually requires your approval. Sometimes it involves voter approval.

So I really like that about just the, the first policy kind of laying out all of the various aspects, and then the second policy, which was even harder to read. Is really all of those nitty-gritty things we have to do when we take out bonds, as we think about bonds. So there's reporting that we have to do to the federal government. There's computations and calculations that we have to do to make sure that we didn't get a tax-exempt bond and earn too much interest on it and have to pay the IRS back. And, you know, managing how much, how much is in our debt reserves, and do we need Do we need to release some of that, or do we need to keep it whole?

So it really just— it lines out really good specific things. One of the, one of the things that we learned in this process was, you know, when we take out a tax-exempt bond or have tax-exempt funding, only 10% of the project within that funding can be used for a private trade or business. So that's, um, you know, if we've got, um, you know, for example, we have, um, Jack as our partner, it's a nonprofit taking care of Centennial Hall. So like looking at that with the aspect of the whole bonds, and when we talk about, um, you know, just changing up how we're using facilities that has current obligations, we have to take into effect what those bond commitments are. And what we can do and not do.

So again, both pieces are super good. Um, I think they're important. They're going to be a good reference piece for us as staff, for you as assembly. Um, one of the reasons why we wanted to bring this to you, um, it's not super urgent right this second, but you know, when we are ready to go do actual bonding and have to get our own rating, one of the questions that we get asked is is, do you have a debt policy and do you have post-compliance debt policies? And we've in the past said, we've got a great charter.

And we need kind of these pieces in place to, to make us whole and to, you know, provide that, that extra guidance, whether it's internally to how we operate or to you all as the decision-making body. So what I'm hoping to get out of this is your direction to bring a resolution forward so that the assembly can formally adopt these two policies, similar to how we do like the investment policy. It's written up, but it's adopted via a resolution, and we'd like to get, get kind of that direction from you to, to do a resolution and bring it to you. I'm happy to answer questions. I'm also happy to arrange for bond counsel to come answer questions if I can't answer them.

All right, who has questions?

Ms. Wall. Thank you, Madam Mayor. Um, Director Flake, you, you touched on the, the one thing that jumped out to me, which was about the only a small percentage of projects funded by a bond can be used for private trade or business. Which includes nonprofits, um, because I mean, maybe I'm interpreting that wrong, but I was like, to me that was like, if you fund a project and some, a good portion of it is managed by a third party, then you shouldn't have, you can't bond for that project. I mean, because I feel like we have bonded for, I know we have bonded for Centennial before.

I feel like that whole facility goes to private rentals for the most part. Like, help me understand that. And is that a— that's an us policy, or that's a requirement? Um, and especially given the conversations we've been having about public-private partnerships, what, what impact does that have? Or am I interpreting all of that wrong?

Thank you, Ms. Wall. Madam Finance Director. Thank you for that question, Ms. Wall. As we've worked with our municipal advisor and our bond counsel, This is, this is the one clause that has made me really, um, squiggly, and I'm not really quite losing sleep, but, um, something that we, that as, as your finance director, I need to get some information to our bond counsel and sit down with our municipal advisor and talk about. Again, the case of Centennial Hall, that was part of a larger bond, and how much of the bond was related to Centennial Hall and what does it mean if we really have more than 10%?

So this is a tax law, um, that, um, that is expected because it's a municipal bond. So, um, as an organization, we should not be taking out tax-free, um, loans through the bonding process for private organization. Tax law says that nonprofits are private organizations. And so this is one where we, we have some homework to come back and, um, do some more discovery. It's an area that, um, I just— I think today even I was talking with the manager's office about, you know, as we, we talk about, you know, third-party operation of facilities, whether that be, um, you know, because we're trying to do something with our budget or for other reasons, One of the things we need to do is just check in on what's, what's going on with that facility.

Did we—. Do we have active debt related to it? What are the restrictions around it? And so it's an area that I don't— I would not go so far as to say I think we're in trouble, but it's an area that we need to investigate and get better detailed information to our bond counsel so that they can help us sort through what's going on and if there's any remediation that needs to take place.

Any further questions? I have a couple. I'm looking at page 93 and 94 and talking about reserve policies. Can you talk a little bit about our budget reserve policy and our debt service reserve funds, and what's the difference between those two, and can we use one or the other? Great question, Madam Mayor.

So our governmental funds, um, you can think of that as our restricted budget reserve. So, um, the Assembly's adopted Resolution 2629 that establishes that restricted budget reserve, and it is, um, you know, like the, uh, the savings account, if you will, that, um, has protections around it that if a creditor is looking at the city, um, they would have good faith that we are, you know, working towards that resolution and, and the things that we've laid out in the restricted budget reserve. The debt service reserve funds are related to revenue bonds, and typically what happens is you'll— we issue a revenue bond, and, um, we— the, the bank that we use to service our bonds right now BNY Mellon, and through the, the covenants and the descriptions of the bonds, um, an amount is set aside. So if we issued $22 million in hospital bonds, maybe we have to set aside $2.2 million as our debt service, um, reserve fund, and that is put in an account at BNY Mellon immediately upon issuance of the loan. So as soon as the debt— the bonds are issued, that account gets funded and it's restricted.

And there's a process by which we can release funds, and that's an annual calculation that we do to figure out how, how much that reserve should be. It's basically equal to your largest year of debt service. It's a little more complicated than that, but that's the easiest way to think about it. And so as we pay down debt, depending on how that debt's structured, we may be able to reduce that amount over time and use it to make debt service payments. But, but that's the difference.

The, the general fund is— or the general government reserve is, is really our restricted budget reserve. And our general fund, the debt service is held by our custodial institution for revenue bonds. Thank you. Mr. Steineger, um, do we have any rules specifying like types of debt that we will not take out? I'm seeing of like revenue anticipation notes.

It's come up in discussion at the state before, you know, like, do we have a policy that says we won't do this? You know, I don't see them discussed in here, but like, is there a policy to guide that? Uh, thank you for the question, Mr. Steininger. We, we have no debt policies at all, um, and I don't believe that our charter prohibits or our code prohibits like bond anticipation notes or Um, tax anticipation notes. Um, I believe the debt policy calls out, you know, how those work.

Um, and certainly, um, we may have, we may have reason to discuss that in the near future as we talk about, um, you know, the seawalk construction project. I think that was at PWFC this week and, um, the funding that's needed and the timing of that. So, um, we don't have any restrictions, um, on that on the books. Um, certainly that would come to you as the governing body to decide if we need to take out a tax anticipation note or a bond anticipation note.

I have one last question. Sorry, don't mean to drag this all out. On page 99, we— it talks about net revenue equal to a certain percentage of annual debt service why is there different percentages? Could you talk about that a little? Absolutely.

So this is our, um, revenue bond covenants. Um, those amounts are, um, set, um, for various reasons. Um, part of it's industry, part of it's, um, you know, the, the financial, uh, ratios that exist when the bond is issued. Um, most of our revenue bonds today that we hold today were issued by the Alaska Bond Bank, and so they would have been party to addressing and setting those requirements that were required to have for the various bonds. And, and, you know, part of our, our annual process of closing the books and working through our audit, making sure that we're, we're checking off all of our boxes, is to go through and look at our, our bond covenants with respect to our revenue bonds in particular, and make sure that those percentages are still holding true.

Um, because if they're not, we have to take action and corrective action to that. All right, thank you. Seeing no further questions, we'll go to Mr. Smith.

Thank you, Madam Mayor.

I move that the assembly direct staff to prepare a resolution to adopt the two policies debt policy for governmental debt and tax, and security law compliance policy for government debt, and ask unanimous consent. Any objection? Seeing none, that's so moved. So our next meeting date will be November 4th, 2026 at 5:30 with a new finance chair. We'll all shed a tear.

And, um, anything else before the Finance Committee tonight? Seeing none, we are adjourned. Thank you all.

Thank you. Thank you.