Tax measures face scrutiny

Assembly to address fallout from controversial ordinance

Posted: Tuesday, January 17, 2006

The Kenai Peninsula Borough Assembly will attempt again Tuesday to resolve legal issues surrounding controversial revenue-generating tax measures passed last June, one of which, a sales tax increase, was rejected by voters in October.

Those tax measures were part of Ordinance 2005-09.

At its Jan. 3 meeting, the assembly postponed action on Ordinance 2005-51 that aims to repeal two sections of Ordinance 2005-09 and send a third to either a special election later this winter or early spring, or to the regular municipal election ballot next fall.

The June legislation included an increase in the borough sales tax from 2 percent to 3 percent, provided a way to withdraw annual amounts from the borough’s land trust fund for use as general government spending, and changed borough law to require a per-seat, per-day system for applying sales taxes to recreational package sales.

Borough voters responded favorably to a ballot proposition in October, 54 percent of them voting to return the sales tax to 2 percent and to add a requirement calling for 60-percent voter approval of any future increase.

Members of the Alliance of Concerned Taxpayers, which led the fight against the sales tax increase, were successful this fall in getting certification for a new ballot proposition to void other portions of 2005-09.

Ordinance 2005-51, introduced by assembly member Ron Long, of Seward, would officially repeal the sales tax increase of 2005-09, now essentially a bookkeeping move, and repeal language that made it easier to tap the land trust account.

That would leave only the new per-seat, per-day basis on recreational sales for a future ballot.

ACT members oppose the piecemeal approach offered in 2005-51, arguing all of 2005-09’s revenue enhancement measures should go to the ballot. That, however, would mean that even the now-rejected sales tax increase could find its way back before the voters, holding the possibility that recent revelations about the financial straits in which the borough currently sails could change voters’ minds and reestablish the sales tax increase.

Ordinance 2005-51 was postponed until Jan. 17 while borough attorney Colette Thompson researched legal issues regarding how to return the tax measures to the ballot.

Thompson said earlier this month that while it was clear that the assembly could simply repeal all of 2005-09, it was less clear whether members could repeal only parts. She also said she was looking into whether the three elements of 2005-09 could be treated as separate ballot measures.

Thompson is expected to have recommendations ready for the assembly Tuesday night.

Also on Tuesday’s agenda is Ordinance 2005-19-39, a measure to revise the fiscal year 2006 budget in light of the success of Proposition 5, which reversed the sales tax increase. Those revisions either repeal or reduce appropriations to the current budget.

Cost-cutting steps taken by Mayor John Williams’ administration detailed in the ordinance include, among other things, canceling a $600,000 appropriation for new accounting software, eliminating the Community and Economic Development Division, stret-ching payments for new sales tax software from five years to seven years, and reducing operations funding for schools, something made possible by lower-than-projected enrollment.

The ordinance is set for a public hearing.

The assembly also is expected to vote whether to reconsider Ordinance 2005-50 approved Jan. 3, a measure conveying 10 acres of borough land to the city of Soldotna for use as a future cemetery. Mayor Williams and Soldotna officials have been discussing possible alternatives to that particular parcel of property.

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