Proposed tax measures continue to dominate discussion among members of the Kenai Peninsula Borough Assembly and borough administrators who are facing a budget shortfall of more than $5 million, and Tuesday's assembly agenda reflects that concern over the borough's finances.
The second of four scheduled public hearings on a proposed 8 percent bed tax (Ordinance 2005-05, introduced Feb. 1) will be held. Also on the agenda are ordinances up for introduction that would address other sections of the borough's tax code in an effort to increase revenues.
For instance, Ordinance 2005-09, submitted by Mayor Dale Bagley, would reduce the current unlimited senior citizen-disabled veteran property tax exemption level to the first $200,000 of the assessed value of a primary residence. That move would generate an estimated $381,000 a year, Bagley said.
His proposal goes a step further than a similar measure introduced March 1. Ordinance 2005-07, which is set for public hearing April 5, proposed to cut the exemption to the first $300,000, generating about $103,000.
Bagley's new proposal more than triples the expected revenue. Ordinance 2005-09 also proposes to up the borough sales tax rate from 2 percent to 2.5 percent, which could generate another $3.55 million a year.
Further, the ordinance would provide that taxes on recreational package sales would be calculated on a per-person, per-day basis, eliminating a disparity that currently exists where large groups often are taxed as a single sale, while small operators selling to individuals must impose a separate tax for each person. The change could generate $250,000 per year.
Finally, Bagley's proposed ordinance would limit the size the borough's Land Trust Fund to $2.5 million. That fund is the account into which the borough places money accruing in lieu of lands or from the use or sale of lands. Under Bagley's proposal, money in excess of $2.5 million would go to the general fund.
Capping the fund, Bagley said, could put another $1.3 million in the general fund, but it would leave sufficient cash in the trust fund to manage, develop and sell properties.
In a memo to the assembly, Bagley said the revenue enhancement measures were intended to fund most of the expected $5.8 million budget shortfall for fiscal year 2006.
In all, the measures would add about $5.48 million to the revenue stream, he said.
"I plan to propose that the assembly increase the property tax mill rate by one-tenth (.1) mills which would provide an estimated $440,000 in tax revenues to the borough," he added.
That proposal has not yet been made formally.
Ordinance 2005-14, proposed by assembly member Dan Chay of Kenai, would reduce the current $20,000 tax exemption on residential real property to the previous level of $10,000. Hearings are tentatively set for April 5 and 19.
The increase to $20,000 is less than a year old and was instituted after the Alaska Legislature voted to increase the allowable exemption. Chay noted that rolling back the exemption level to $10,000, which had been in place since 1978, would increase revenues. When the exemption was upped, borough finance officials estimated it would cost the borough and various service area accounts a total of more than $902,000.
Chay also has proposed Ordinance 2005-15, which would eliminate a provision that currently says services provided on account are to be taxed on the maximum $500 for each billing per account. Eliminating that provision would make the tax code more consistent.
Ordinance 2005-16, another Chay measure up for introduction, would remove the sales tax exemption for raw materials sales to licensed building contractors. According to Chay, a licensed contractor might execute as many as 6,000 transactions per year, but pay no sales taxes. Meanwhile, contractors often are "significant beneficiaries of borough services," Chay's ordinance says.
That ordinance, if introduced, would get public hearings on April 5 and 19.
Peninsula Clarion © 2015. All Rights Reserved. | Contact Us