Gas, diesel may get tax break

Posted: Friday, April 04, 2003

A measure introduced at Tuesday's Kenai Peninsula Bor-ough Assembly meeting seeks to exempt a portion of gasoline and diesel fuels from the borough sales tax.

Assembly member Paul Fischer, of Tustumena, said the way the borough applies sales taxes now actually taxes not only the fuel, but also state and federal taxes that are applied to the commodity. Hence, consumers are paying a "tax on a tax," something that could be eliminated by exempting from borough sales taxes an amount equal to the state and federal excise taxes paid by distributors.

"All this attempts to do is say is, Borough, you tax first. Then add the federal tax and the state tax,'" Fischer said.

He acknowledged that the tax break wasn't large, maybe as little as a cent a gallon, but it would be "an effort to give the general public some kind of tax relief."

A public hearing on Ordinance 2003-11 is scheduled for May 6, when the assembly meets in Seward.

A similar idea was proposed in the late 1990s. An analysis done by the borough department of finance in 1998 suggested the borough and its municipalities would lose tens of thousands in revenue, while the savings to individuals at the pumps would be minimal. The analysis said the borough would lose $127,000, Kenai $42,000, Soldotna $45,000, Homer $29,000, and Seward as much as $10,000. Assembly member Chris Moss, of Homer, chair of the assembly's finance committee, said those costs could have risen by as much as 15 percent since then.

"The key issue here is that within the last year we had an extensive discussion on sales tax code changes. This was not brought forward under that package," he said.

The cities have not had any input on the proposed tax change, he said.

"This does have some significant financial impact on the cities," Moss said, adding that he was reluctant even to introduce the measure.

Fischer said he doesn't know if it is true that the borough or the cities would lose what analysts predicted. The issue is fairness, he said.

"Some people say the borough may lose $127,000. To be honest with you, I don't think that's going to hurt a $24 million (borough) surplus," Fischer said.

The cities can come to the borough to present their arguments against the tax during the May 6 public hearing, he said.

"I'm more concerned about the borough tax than anything else," he said.

According to Jeff Sinz, director of finance, if the borough adopted the law, it would automatically apply in the general law cities of Homer, Soldotna and Seldovia. As for the home rule cities, it would apply in Kenai unless the Kenai City Council acted to override it. Seward, where the code is a bit different, would have to move specifically to adopt the measure. Otherwise it would not apply there.

The assembly also adopted three ordinances Tuesday.

Ordinance 2002-19-35 authorizes the borough to purchase four lots along Wilson Lane in Soldotna at a cost of $122,500 as a location for an adjunct administrative office building for the Central Emergency Services facility across the street.

Exactly who would use the building is not yet clear. CES plans to use part, and it is possible that the Alaska State Troopers, the city of Soldotna and the borough Office of Emergency Management might utilize other parts.

Sure to be part of the discussion over who will utilize the building is the city of Kenai's interest in housing OEM on the second floor of the Pacific Rim Institute of Safety and Management facility off Marathon Road. According to the minutes of the March 10 borough planning commission meeting, CES and OEM officials have expressed concern that the Pacific Rim Institute of Safety and Management facility is not located centrally enough to meet needs.

The assembly also adopted Ordinance 2003-06, authorizing negotiation of a lease on a 30-acre parcel within the buffer property of the Central Peninsula Landfill to Aardvark Pumping. The company plans to use the land as a septic waste disposal site.

Also adopted was Ordinance 2003-07, a measure revising the membership of the E-911 Board of Directors and clarifying emergency communications authority.

In 1989, the borough set up the 911 Emergency Dispatch Center in Soldotna and established a board of directors to oversee its operation. The borough ordinance extended emergency communications services to any city that relinquished its communications powers to the borough. All first class and home rule municipalities did so.

But that left a lingering issue that has not been adequately clarified in code. While the cities gave up communications powers, they did not relinquish dispatching services. Ordinance 2003-07 makes it clear that cities did not relinquish dispatching powers.

In other business, the assembly introduced Ordinance 2002-19-36 appropriating a grant from the Alaska Division of Homeland Security for $14,000 for developing community emergency resp-onse teams, and introduced Ord-inance 2002-19-37 appropriating another division grant for $27,937 to be use in updating the borough's Disaster Emergency Operations Plan.

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