Assembly violating law with sales tax increase

Posted: Wednesday, March 28, 2007

In October of 2005, the Voters of the Kenai Peninsula Borough passed a citizens initiative capping the sales tax at a rate of 2 percent and requiring a 60 percent majority vote to increase the rate. However, our Assembly is now considering an ordinance that would increase the sales tax rate to 3 percent effective January 1, 2008. Can’t the assembly members read?

Alaska Statutes Title 29.26.190. clearly reads: Effect. (a) The effect of an ordinance or resolution may not be modified or negated within two years after its effective date if adopted in an initiative election or if adopted after a petition that contains substantially the same measure has been filed.

The proposed Ordinance 2007-07, as written, violates the Sales Tax Cap passed by Voters in October 2005. It is against the law to enact an ordinance negating the Sales Tax Cap until at least October of 2007. While the effective date of the Ordinance 2007-07 sales tax rate increase falls beyond the protection of the Sales Tax Cap initiative, the ordinance is being considered now, clearly within the two year minimum life of this initiative.

There are two lawful courses of action that the Assembly could take: 1) a section could be inserted to put the sales tax increase to a vote, and would increase the rate to 3 percent if ratified by a 60 percent majority; Or 2) The whole ordinance could be withdrawn until after the October 2007 election.

It is a very serious matter to willfully violate state statute. Indeed, this is one of the issues that forced the Alliance of Concerned Taxpayers to file their complaint against the Kenai Peninsula Borough in December 2006. State Statutes require a public vote to approve any increase in a sales tax rate adopted by ordinance: a fact previously disregarded by the assembly.

At the very least, the Borough should seek an impartial second opinion regarding the lawfulness of Ordinance 2007-07. It would be money well spent to insure that this Assembly follows both the letter and the intent of the law.

Vicki Pate


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