Council mulls FY 27 budget, cab woes and changes to taxing pull-tabs

The Nome Common Council is on track to pass a budget for fiscal year 2027, but all present council members agreed on Monday that the final product still needs a bit of work before its final passage in June.

Budget
The council voted the city’s budgets in first reading and expects more tweaking before it will be voted on in the second reading and final passage in June.
Prior to the first reading on Monday’s regular meeting, the council held a work session attended by only three council members, Scot Henderson, Mark Johnson and Adam Lust.
For the regular meeting, the council ran 15 minutes late, waiting to make quorum, which was reached with the arrival of council member Maggie Miller.
Then they went to work.
The big picture: The council looks at a total general fund municipal budget of roughly $19.5 million for fiscal year 2027, starting on July 1. Last year, the council passed a lean budget of a tad over $17 million.
As it stands now, the city would need to dip into their savings account and withdraw nearly $188,000 to balance the FY 27 budget.
More than $13 million in revenue comes from sources other than property tax or the savings account. 
The taxable property in Nome, according to the assessor, is $534,784,763. At a proposed stable mil rate of 11.5 this would bring about $6.15 million to the city’s coffers, still nearly $200,000 short of a balanced budget.
During the work session, council members dissected the budget and dove into the minutia. Landfill fees? They need to go up as they haven’t been adjusted in years. Waiving facility rental fees? Let’s look at those exemptions again.
What are low hanging fruits to boost the city’s revenue? City Manager Lee Smith again pointed to the underreporting of personal property and suggested to look again at removing exemptions.
When was the last time the bed tax was adjusted? A while ago, but the bed tax increase would require a referendum by the voter. Now, don’t say “sin tax” but what about raising taxes on alcohol, tobacco and marijuana? Let’s talk more in the summer about those possibilities.
The most expensive city department is the Nome Police Department with a budget that rose from $4 million last year, to $4.2 million adjusted in mid-year and now a proposed budget of $4.9 million. What drives the increase? Chief Mike Heintzelman was at hand explaining that the department is filling positions this year that were vacant and the only new budgeted position is a Deputy Chief, which Heintzelman said is important to have when the chief is out of town or on leave. He said with the increased population driven by construction projects and “man camps” going up, he wanted to make sure that NPD is adequately staffed to answer calls. “We see problems when we don’t have enough staff,” he said, adding that enough staffing would decrease overtime pay for officers needed to pull extra shifts.
Council member Scot Henderson requested one more work session on the budget before it will be voted on in June.

Pull tabs
Council meetings rarely see robust participation by the public. Last Monday, though, the audience gallery was packed with representatives from nonprofit organizations who showed up in force to lobby for an ordinance repealing the current method of taxing pull tab sales.
Council member Mark Johnson requested an amendment to the agenda to include discussion of the ordinance proposal. Since it was not included in the council packet, City Manager Lee Smith read the entire bill into the record. The gist of it: charitable gaming provides essential financial support to nonprofit organizations. But the pull tab sales are taxed by the city on gross sales, before prizes are paid out and operators are paid, making for very small profit margin. This was exacerbated when the city’s sales tax rose to six percent effectively increasing the tax burden between 20 to 30 percent on charitable gaming. The nonprofits asked the council to adopt an ordinance that would tax the pull-tab based on the “ideal net” of each pull-tab series. What is ideal net? Each pull-tab series is manufactured with a predetermined and state-approved prize payout schedule, and establishing a fixed relationship between gross receipts, prize payouts and net proceeds is referred to as ‘ideal net.”
Council member Adam Lust wanted to know the financial impact on the city’s coffers.
Mayor Ken Hughes answered: The city takes in about $300,000 in pull tabs revenue and if the tax structure were to change, this revenue would drop to $65,000. Hughes also said that changes are on the horizon with e-tabs, electronic pull-tabs, and state legislation currently discussed may upset the entire Nome charitable gaming scene.
Council member Henderson requested a work session on the issue, to gain a better understanding of the matter, before voting on it.

No clarity about the fuel situation
As fuel prices are rising and falling with every tidbit of news coming out of Washington and Tehran about the Strait of Hormuz, Nomeites are worried about the price of heating oil, fuel, aviation gas prices and groceries that are increasing in cost when transportation costs go up. In the last council meeting, Nome Joint Utilities General Manager John Handeland said that NJUS has a contract with Crowley as the supplier to deliver fuel to NJUS from 2026 to 2028. NJUS is part of the Western Alaska Fuel Group with Kotzebue, Unalakleet and a few other utilities. The group met this week and Handeland said, “There is no clarity at this time. I don’t know that we expected anything different, but Crowley is still saying that they are setting up to honor their contracts.”
Adding transportation costs, the pricing will be based on the actual indices for a 30-day period in August, Handeland said.  “I just hope things have calmed down a little by that time,” Handeland said.

Lack of cabs
Melissa Ford, realtor with Nome Sweet Homes, wrote a letter to the council saying that the lack of cabs is affecting her business of short-term rentals as visitors stay away from Nome, citing the lack of transportation. “These were visitors who came specifically to experience what Nome has to offer,” she wrote. “We are losing them, and their word-of-mouth, permanently.”
She suggested to do away with the CDL license requirement – which was corrected as the city does not require a CDL license, rather a chauffeur’s license. She asked the city to reduce license barriers to incentivize residents to offer legitimate cab services and to create a clear path to get licensed “so that drivers are operating legally, paying taxes and being accountable to the city.”
Steven Longley, who in the past has operated a cab company in Nome and is now operating in a gray zone offering “rides for donations” stepped to the podium and complained about a bureaucratic holdup. “I still can’t get any of my potential drivers to get a chauffeur [license]. There’s one [application] sitting on his desk and going to sit there because in the application, it states that you have to be associated with a cab company or be a cab company. There are no cab companies, so they’re refusing to even process it.” Longley pointed out that the application process is not codified in an ordinance and complained of a lack of policy and procedure.
He said as it stands, he would qualify as an Uber or Lyft driver, which are regulated not by municipalities, but by the state. He said under those rules, he does not need a city chauffeur license to legally operate an Uber or Lyft cab.
Mayor Kenny Hughes said later in the meeting that Alaska has transportation network regulations and Uber and Lyft operate under those regulations, and municipalities are not to interfere.
Deputy City Clerk Brad Soske stepped to the podium and said that Longley did receive his chauffeur’s license, but he still needs a taxicab license to operate cabs legally. He also said that he double checked with Uber and Lyft and there is no driver operating in Nome on Uber/Lyft apps, which are cashless.
Council member Mark Johnson stated that the council has removed the caps on how many taxi cabs can operate in Nome, they have de-cluttered the language and requirements for taxicab licenses but still require chauffeur licenses, as every other hub or major city in Alaska does.  He agreed that Nome needs cabs but that he doesn’t see that Nome has existing licensing barriers that would keep people from running a cab service. “We’re not creating something new that I’m aware of, and unless the city’s got out of cabbing altogether, which I don’t think is going to happen, I think all we can do is encourage cab companies to be legitimate and jump through the few hoops that there are,” he said.

NSEDC
The council tabled a decision on the designation of the 2025 Community Benefit Share from Norton Sound Economic Development Corporation, a $250,000 chunk of money that was proposed to go toward an outdoor basketball court. There are no restrictions on how the funds can be spent, but NSEDC requires that the money is used for high priority and that the city must facilitate a public process. Council member Henderson wanted to hear back from the community and the issue was tabled until the first council meeting in June.