Kenai council opposes borough cap, backs search for other options

Posted: Monday, February 07, 2005

Kenai City Council members Wednesday sent a mixed message to the Kenai Peninsula Borough Assembly.

Saying an increase in the borough's cap on taxable sales from $500 to $1,000 would hurt small business, the council voted 6-1 on a resolution opposing an upcoming ordinance before the assembly that seeks to do just that.

However, an amendment added to the city's resolution says the city would like the borough to continue looking at other ways of increasing revenue.

"I don't want to send the wrong message to the assembly that we don't think they should consider different ways to raise revenues," council member Blaine Gilman said.

The borough is facing a budget crunch that could force cuts to education — something the council does not want to see. However, council members argued that the taxable sales increase isn't the right way to raise funds, and Gilman said other revenue-generating ideas could include a bed tax or eliminating some of the borough's many property tax exemptions.

The assembly's proposed increase would double the amount of sales eligible for sales tax. If the borough's ordinance passes, the increase in cost on a $1,000 item in the city of Kenai would be $25. Currently, only the first $500 of any purchase is eligible for sales tax.

The only council member to vote against the city's resolution was Joe Moore. Moore argued that the borough should have all avenues available for raising revenues — including a sales tax increase.

"In the quest for additional revenue, I don't think we should close any doors at this point," Moore said.

But others on the council said the danger of hurting small business in town outweighed the potential revenue gain that would be garnered by raising the cap.

"Right now, with where we're at with our economy and where we're going in the future, this is the wrong time to do this," council member Rick Ross said.

In other action Wednesday, the council:

n Approved the transfer of $4,000 in the city's water and sewer special revenue fund to purchase appraisal services. The services are needed to appraise land the city needs for its planned water treatment project.

n Approved a $4,000 transfer to the airport land special revenue fund from the land contingency fund for maintenance and repairs. The money is needed because the maintenance budget has been exhausted by unexpected repairs, and the money is needed for repairs and maintenance for the remainder of the fiscal year.

n Approved a job description for the position of city attorney.

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