Fairbanks City Hall

The Patrick B. Cole City Hall sign is seen Wednesday, June 17, 2020, in downtown Fairbanks. Caitlin Miller/News-Miner

A new nickel-a-gallon tax on gasoline brought to the city of Fairbanks for sale goes into effect Oct. 1.

Fairbanks Clerk Danyielle Snider said the City Council approved the tax Monday night in a 4-2 vote.

Supporters said the tax, which is expected to net the city about $500,000 annually, will help solve a million-dollar budget deficit.

“It’s not going to solve the whole problem,” said Councilman Aaron Gibson, who voted to approve the tax.

Councilmen Jerry Cleworth and David Pruhs voted against the wholesale gas tax.

Cleworth said the city is handing out employee raises at a time when the economy is struggling and that the revenue deficit can be solved with budget cuts.

“What I see essentially is a focus on constantly trying to raise more money,” Cleworth said.

Under the city charter, a general sales tax would need voter approval. City voters have repeatedly rejected a sales tax.

The new gas tax is an excise tax or a wholesale tax and does not require a public vote.

Cleworth sponsored the gasoline tax along with Councilwomen Shoshana Kun, June Rogers and Valerie Therrien.

Rogers credited Cleworth for the finished product.

“Mr. Cleworth crafted the ordinance,” she said. “It was so well done. It was easy for us to get on board with that.”

The former city mayor said he soured on the ordinance, though, after his attempts to amend it were rejected.

Cleworth sought to get the council to agree to freeze city hiring in the upcoming 2021 city budget to save money, he said.

Under the ordinance, the tax would be collected from those who bring gasoline to the city for sale.

Under city taxation rules, any gas tax revenues over $500,000 would be used to offset property taxes, lowering the city mill rate.

Contact staff writer Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough.