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Voters to consider tax increase

Economic development funding to go on the ballot

Posted: July 7, 2011 - 8:00am  |  Updated: July 7, 2011 - 8:59am

Voters in the Kenai Peninsula Borough will have a choice in October over whether they would like to fund economic development through a sales tax increase.

On Tuesday, the Kenai Peninsula Borough assembly approved, 7-2, Ordinance 2011-23, which will place a measure on the ballot asking voters consider a raise in the borough-wide sales tax from 3 percent to 3.1 percent with the additional .1 percent dedicated for economic development purposes.

Assembly members Charlie Pierce and Ray Tauriainen voted against the measure.

The increase, a penny on a $10 sale, would raise an estimated $900,000 per year.

The assembly mulled the ordinance for more than a half-hour. Members also debated whether the borough's non-departmental agencies, like the Kenai Peninsula Tourism Marketing Council, Kenai Peninsula Economic Development District, Small Business Development Center, and the Central Area Rural Transit System, would be funded under the measure.

Pierce said before the borough collected more money for funding economic development, the assembly should find a system of measuring the performance of those agencies the borough funds.

He also wondered about the amount of money needed to fully and effectively fund economic development.

"Really, to be effective and to be creative, we need to give them more money," he said. "$40,000 (to the EDD)? Probably what they are doing with that money is answering the phones. How effective is that? Are we really doing anything with that?"

Pierce said he agreed with the concept of the ordinance but had several concerns with it, including other agencies developing a "me too syndrome," he said.

"I think we are a second class borough and it's real specific as to what we are supposed to be spending our money on and so I will vote against this ... because there is a dollar amount tied to it," he said. "Until we have some standards, maybe an analyst to go back and see where we are spending our money and whether or not it is really effective I'm not in favor of spending any of the taxpayer's money."

Several residents spoke out against the measure, including Ruby Denison, who argued that government rarely finds success when funding private businesses.

"It looks to me like this is just one of those things where you have a sales tax paid by everybody to support just a few," she said, adding that she doubted the "success" of the various non-departmental agencies to boost the economy.

James Price, of Nikiski, said he doubted the ordinance would get the thumbs up from voters in a few months.

"Many times there are things that move forward that truly are not economic development or feel good or whatever kind of project people want to do," he said. "My observation is that it is based on a special interest leverage of votes on the assembly."

Shanon Hamrick, executive director of KPTMC, said her organization had not yet taken a stance on the issue.

"But, we want to be a part of the solution and we want to be a part of the conversation," she said.

Assembly member Brent Johnson said his main priority was finding alternative ways of funding the non-departmentals.

"It is completely safe - if the voters don't like it, well then that's getting to where I'm going, which is either create this source of money, or I'm not going to fund them," he said.

Johnson said, however, he believes the programs and non-departmentals can be effective tools.

"If you want to give a little bit of money to some people who are willing to use the old thinker and find ways to stimulate the economy, I think it can happen," he said. "I believe in these things, I believe in the voters making the decision and I love it when they do because then I don't have to."

Assembly president Gary Knopp said passing the ordinance would help him make budget decisions in the future.

"I'm going to support sending this to the voters because if the voters say, ‘Yes,' I'm going to take it that they are really serious about funding economic development in our borough," he said. "If they say, ‘No,' then in my last year in the budget cycle, I will not support funding non-departmentals."

Assembly member Linda Murphy said it is "vital" the borough help maintain the economy and hopefully expand it, adding, "We all gain from economic activity."

"I don't really understand why anyone would be opposed to putting these issues on the ballot and letting the people decide if they want to support it or not," she said.

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