Unalaska, AK – Tuesday night the city council continued a discussion on eliminating sales tax on food and residential heating fuel. The city takes in about $570,000 in sales tax annually for these items. Council members say they are considering the option because they want to make living in the area more affordable. But City Manager Chris Hladick says that may not be the best way to help residents.

"If the intent is to help the residents of the community, then we maybe need to look at ways to help people's utility bills," he suggested. "It would be more of a direct way to impact people's budgets than doing away with the sales tax on food."

Hladick proposed putting an additional $500,000 into a local program that would be similar to the statewide Power Cost Equalization (PCE) program. He says that it would roughly average out to about $50 in savings for each household each month. A family would have to spend about $1,600 on food per month to have the same savings. Council member Skip Southworth was one of the four members who supported the idea.

"I really like the PCE idea it really helps get some money to the residents of the community," he said.

Council member Dick Peck was the only on opposed to the idea.

"The council has a policy to diminish our subsidies to the different fund accounts this is wastewater and the landfill we are really trying to do, to reduce our subsidies," he said. "I hear tonight, staff wants to increase our subsidies to the electric plant. Which if you do that, you're going to turn around and find yourself in real trouble with your bond holders and other rate making processes because this is going to have a negative effect."

He supports cutting sales taxes because he says the city is over collecting. Other council members only supported cutting taxes on residential heating fuel, though the definition of residential is still unclear. Hladick said the city would have to determine if businesses and agencies that house employees would also get the cut.

In other city energy matters, negotiations have stalled between the city and Jack Wood, the owner of Makushin Volcano's thermal fluids. Hladick says they cannot come to an agreement on royalties for developing geothermal power in the area Wood's company is asking for too much. The city will meet with the Alaska Energy Authority to discuss the project on August 19th.

"The size of the project is so big that the state is going to have to backstop the risks. It's a very risky project. I think were talking at 150 million plus," Hladick explained. "For a town of 4,000 people, it's a huge project. So to go forward you have to have the support of the state and that's why were going to talk to them."

Jack Wood has owned the land near Makushin since the early 1980s and has never come to any agreements on project proposals for developing the energy potential.