Borough, petition group have different takes on sales tax increase

Posted: Friday, January 20, 2006

The public has had a chance to begin to digest Mayor John Williams’ transition team’s report — a report that outlined the financial crisis the Kenai Peninsula Borough is facing.

Significant budget cuts already proposed for the current budget by his administration are necessary, Williams said, because of the loss of revenue caused by Proposition 5, an initiative that repealed a 1 percent sales tax increase at the Oct. 4 election. Further loss of revenue comes because state election law requires the borough to suspend imposition of the per-day, per-seat recreation tax and the Land Trust Fund measure pending the outcome a referendum of Ordinance 2005-09 that will appear on the fall ballot.

Williams has pulled no punches laying blame for that at the feet of ACT supporters.

While celebrating its political success at the polls, ACT has consistently rejected the idea that it is the cause of the borough’s financial problems, stating that Ordinance 2005-09’s provisions were arguably illegal, and that the borough government would do well by cutting more spending, rather than raising taxes.

Tim Navarre, a former assembly president and now chief of staff to Williams, has noted the borough only has two general areas for enhancing revenues — taxes on sales and taxes on property.

“Prop 5 took sales tax off the table,” he said, adding that further cuts, even painful ones, may be coming. Further, property tax increases are possible, perhaps likely, he said.

Earlier this month, ACT President Mike McBride expressed confidence that voters would repeal Ordinance 2005-09 whenever an election was held, and not be moved off their initial rejection of the sales tax.

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