The city of Soldotna likely will see some sales tax benefit when the Big Kmart in Kenai closes its doors. But Soldotna City Manager Tom Boedeker said shoppers may bypass his city all together in search of bargains.
"My speculation is we would not see a shift in business that would generate more than a $300,000 shift into the city of Soldotna, and that's probably at the upper end," Boedeker told the Soldotna City Council on Wednesday evening.
Although Big Kmart could be counted on to bring Kenai around $800,000 each year in revenue, Boedeker said he believes shoppers will either disperse to other stores in the area or drive to Anchorage to do their shopping.
"When you don't have two stores to compete, (consumers) still feel the need to comparison shop," Boedeker said. "Unfortunately, we're probably going to lose a significant amount to Anchorage."
Additionally, Boedeker said sales tax figures this year in the city already have been disappointing. He said most projections so far indicate that Soldotna's 2002-03 figures would likely come in at less than or around the same level as last year's numbers.
"Sales have dropped," he said.
Boedeker pointed to recent layoffs at Unocal and Big Kmart as possible reasons why people may not be shopping as much. And at least one council member speculated the winter-long heat wave also may have contributed to poor sales.
Council member Jane Stein offered a theory that peninsula residents may be taking advantage of good road conditions and traveling to Anchorage more than they would during a normal winter.
"They're going up there to do their shopping," Stein said.
Despite the gloomy news for the area, Boedeker said Soldotna will still see some benefit from the Kmart closure. However, he cautioned that Soldotna's gain will come at the expense of the central peninsula as a whole.
"(Sales tax) will probably be up, but that's at the misfortune of our sister community," he said.
Overall, the sales tax numbers are pointing to an economic picture that's not entirely pretty. Boedeker said it's not time to panic, but it's obvious the economy has taken a significant downturn.
"It's not a gloom and doom scenario," he told the council. "But it's very tight."
In other action Wednesday, the council:
Passed a resolution in support of House Bill 57, which would set a fixed price for how much royalties the state gets from the sale of natural gas. It's believed the bill will help the North Kenai Agrium nitrogen facility operate more competitively by allowing them to know how much royalty cost to factor into the price they charge consumers for their products.
Set a public hearing for March 12 to discuss a proposal by Mayor Dave Carey to amend the mayor's salary from its current $300 a year to $50 each year, with the remaining $250 placed in an expense account. Instead of the money going to the mayor, Carey said the account would be used to provide candy, snacks, flowers or gifts for city workers and members of city boards and commissions.
Passed a resolution allowing the city to enter into a sole source contract with Rozak Engineering to evaluate reports from the former Alaska Department of Transportation and Public Facilities maintenance site. The city has the option of purchasing the site from the state in April, and Boedeker said he wanted to get an outside opinion of possible contamination issues before deciding whether to purchase the site.
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