Hundreds of fishermen across Bristol Bay offload their catch at local processors in Dillingham—the main hub for the busy Nushagak district. But of all the ports across the bay, Dillingham’s holds something unique: for the past 12 years, the city has not enforced any raw fish sales tax whatsoever, missing out on millions of dollars. KDLG’s Ryan Berkoski sat down with Alice Ruby, the mayor of Dillingham, and Chris Maines, the city planner, to talk about what caused this tax hiatus and why it’s back now.
This interview has been edited for length and clarity.
KDLG: Thank you both for joining me today. So, as I understand it, Dillingham had a fish tax back in 2012, but it appears that that went away at some point. Can you talk to me about the story of the fish tax—where it went and why it’s back now?
Ruby: We started doing feasibility work on annexation in about 2003. And by 2012 the city had proposed annexing the Nushagak fishing district, and the Dillingham voters approved it, and that put into effect a fish tax of 2%, right?
Maines: 2.5%.
Ruby: 2.5%. And so we were able to levy that tax for a couple of years, and it's a tax that is based on the harvest that occurs within the boundaries of the municipality. And then some neighboring communities jointly filed suit against the state, their argument was that the state had allowed this annexation to occur under an incorrect process.
Maines: Yeah, that was their justification—that we went to a local option vote.
Ruby: And they felt that it should have been a legislative approach rather than local options, so the court did find in favor of the communities, so our annexation then was reversed. So what we've learned recently is that the city of Dillingham had never taken that fish tax off of our books, so even though we didn't have the district within our boundaries, the tax has always been there as an option for levying.
KDLG: So it's just the selling of the fish itself that's taxed, not necessarily the harvest of the fish.
Ruby: That's correct, and that would always be the case, anyway. In most communities, the selling was interpreted to be when the fish went from the individual boat to the tender. In our case, we're interpreting it to be that the sale is occurring from the tender to the processor.
Maines: And a point of clarification on top of what Mayor Ruby said—when the local option vote came down, there were two things proposed: one was the annexation, the second was the fish tax. And when the annexation was eliminated, that eliminated the severance portion of the fish tax process. What remained was the use and the raw fish sale. So, there were three mechanisms in place, only one was removed.
KDLG: So, you could have “fish taxed” this entire time, you just haven't been.
Ruby: Right, because we just didn't realize that we still had the authority to do that.
KDLG: What brought this back up to the surface now? Why over a decade later?
Maines: Well, to be perfectly honest, I, from my standpoint, never stopped bringing it up. When locals would move to Dillingham over the past decade and they would see the lack of funding for community resources, the question would always come up: “Well, why does Dillingham not just impose a fish tax?” And these talks have happened even in recent years since I've been a city employee, and I would often joke back to them, “Well, we do have one, we just don't enforce it.”
KDLG: So this is just a result of years of research on your part, Chris, to eventually figuring out it's been there the whole time.
Maines: That would be safe to say, yeah.
Ruby: And the tax is really no more than is already being levied in other districts. The Lake and Penn Borough and Bristol Bay Borough both have fish taxes, and in fact many of their communities have fish taxes as well on top of that.
Maines: Into Mayor Ruby's point, there are several options in place for our local fishermen who are taxed by this fish tax. One of them is that it goes towards their property tax, for instance; the other mechanism in place is a refund of their raw fish taxes paid if they fall into low income.
KDLG: Okay, so there is a refund for the fish tax as well.
Maines: Yes, there are two options in place: one, if you pay real property, or another if you fall under low income, it can be rebated.
KDLG: And all this new money you guys are going to be getting from the fish tax, where will it be going, and what will it be doing for Dillingham?
Ruby: Well, in this year, and in the last few years, the city of Dillingham has had to budget from our fund balance—and that’s a way of saying we're funding the city out of savings. But we've been able to reduce that for what we expect to be the next year, so we're not pulling as much out of our savings, but this fish tax would just go to support city services in general, and hopefully allow us to keep operating without having to make major cuts. Right now the city does provide support for the school, that’s something that a lot of people are aware of. But we also support the water and sewer, public works, fire rescue, the harbor, library, senior citizen center, and almost all of those services are funded by local taxes. This fish tax would really contribute towards continuing to support those services.
KDLG: And one more less related question: you weren't able to annex into the bay, but are you still trying to expand Dillingham? If not towards the bay, maybe towards Aleknagik?
Ruby: I guess the short answer is the council hasn't made a decision on how to go forward with annexation. We've got a long history of looking at annexation options—whether to go north, whether to go east, whether to go out onto the water, and I would say going north has not been a priority. The main reason there is most of that land is trust land one way or the other, it's either native allotments or corporations, and there would not be any revenue sources that direction. Going east, there's been some discussion of that only because in recent years the Wood River Special Harvest Area has been so active that there might be potential for fisheries-related taxes, and going out into the bay has been discussed, but up to this point, the council hasn't done really a more recent feasibility to see which way would be the most beneficial, and annexation isn't something that would be done lightly, because it's expensive, and also it takes time. The law mandates, and of course, our council would also want, you know, outreach to the public, outreach to our neighbors. It would require, you know, community meetings, and a lot of work that would need to be done. So we've been discussing it, but we just haven't come to terms with what, which way to go.
KDLG: And any other final thoughts to put out there?
Ruby: Well one thing that hasn't been discussed recently too is borough formation. We've been through multiple different efforts to look at the feasibility of borough formation on this side of the bay, and as Chris just indicated, historically we can think of at least six times that we've looked at borough feasibility for this side of the bay. And I'm still a fan of that, because I think there are other issues, along with education funding and other things, one of them being pulling the pebble mine area inside a borough boundary, where there would be more influence by a borough for land use regulations, and so on. But that also is an expensive, lengthy process. And I haven't gotten a sense that that's something that's at the top of people's minds right now, but certainly it's something that shouldn't go away. We should keep thinking about whether it's time to look at a borough again on this side of the bay.
KDLG: Well, thank you guys.
Ruby/Maines: Thank you.
For more information, visit the City of Dillingham website. Note that processors/buyers must register within 10 days of receiving notice, and fishermen are reminded to keep copies of all fish tickets.
Raw Fish Sales Tax in Other Areas (provided by Mayor Ruby):
Bristol Bay Borough:
Raw Fish Tax 3%
Fisheries Business Tax 1.5%
Lake and Peninsula Borough 2%
Egegik 3%
Pilot Point 3%
Togiak 2%
Aleutians East Borough 2%
False Pass 2%
King Cove 2%
Sand Point 2%
Ketchikan Gateway Borough 2%
Saint Paul 2–3.5%
Unalaska 2%
Have any questions? Reach out to fish@kdlg.org
