Recently filed initiative applications seeking to make all projects costing more than $1 million subject to approval by more than 60 percent of borough voters, and which would have taken decisions on future property tax mill rate levies out of assembly hands have been rejected by the Kenai Peninsula Borough clerk on constitutional grounds.
A group of residents calling itself the Alliance of Concerned Taxpayers, or ACT, submitted two initiative applications in late March regarding voter approval of capital projects.
Application 2005-01 would have made voter approval retroactive to Jan. 1.
The second, designated Application 2005-02, would have applied to all capital improvement projects costing more than $1 million built, acquired or operated with borough funds after the date of adoption, except those projects financed by bonds already approved by voters.
On April 11, ACT members submitted three more applications that, to varying degrees, would have imposed restrictions on the assembly's ability to levy property taxes.
Application 2005-03 sought to reduce the mill rate cap from 8 to 6.5 mills effective April 1. The current tax rate is 6.5 mills. One mill is equal to $100 of tax per $100,000 of assesed value on a property.
Application 2005-04 sought to make the same reduction in the cap but also would freeze current residential, senior citizen and disabled veteran real property tax exemption limits, effective April 1.
Application 2005-05 in-cluded the provisions of Application 2005-04 but added a repeal of filing fees paid by those initiating property tax appeals.
In an April 13 letter to Ninilchik resident and ACT representative Ruby Kime, borough Clerk Linda Murphy rejected the capital project initiative applications because they violated Article XI, Section 7, of the Alaska Constitution, which among other things prohibits the use of the initiative to repeal appropriations.
Because Application 2005-01 would be retroactive to Jan. 1, it would impact at least two major spending measures Ordinance 2004-19-29 adopted Jan. 18 appropriating $3.7 million for construction of a multiuse emergency response center, and Ordinance 2004-19-34, which would appropriate $909,700 for the initial phases of constructing Keystone Drive.
While that last sum falls below the $1 million threshold, the entire project is expected to exceed $3 million.
"Enactment of the ordinance in Application 2005-01 would require that both of these ordinances be submitted to the voters for approval," Murphy said, adding the retroactive effective date in Application 2005-01 "would clearly violate the constitutional prohibition against using the initiative to repeal an appropriation."
Application 2005-02 was rejected for the same reason, but while that was done on somewhat more technical grounds, the implications of voter passage of such an initiative would have had far-reaching implications. Its requirement that voters approve any $1 million-plus project "operated" with borough funds essentially would affect every capital improvement project undertaken since the borough incorporated in 1964, Murphy said.
Further, the clerk added, both the construction projects named above already involve active legal contracts. Both the U.S. and Alaska constitutions "prohibit passage of any law impairing the obligation of contracts," Murphy said.
In an April 18 letter to Nikiski resident James Price, another ACT member, Murphy also rejected the three applications concerning the property tax issues.
She said one provision in 2005-05, the catch-all mill-rate cap, exemption freeze and filing fee repeal measure, had to be rejected because the property tax appeal fee had been adopted by ordinance.
"Repealing an existing ordinance is a referendum, not an initiative, and must be submitted separately as a referendum," Murphy said.
She also said that based on Alaska Supreme Court case law provisions requiring voter approval of a mill levy, or that would cap the mill levy at 6.5 mills, were not subject to the initiative process. The initiatives conflicted with Title 29, she said.
ACT organizer Mike Mc-Bride of Nikiski said the group was taking the rejections in stride.
"We are doing this in steps," he said Wednesday. "Our next move, which we have already done, is to turn everything over to our attorney. He will review their responses and report back to us as to whether their positions are defensible or not. At that point, we will make a decision whether to pursue legal action to force the issue."
More recently, ACT members filed other initiative petitions on which the clerk has yet to rule. Murphy said she had until Monday to address the following ACT initiatives that would:
Amend the borough sales tax code to require that any increase above 2 percent on retail sales or changes to how maximum tax is computed by approved by at least 60 percent of voters at a regularly scheduled election.
Amend the borough code's Title 5, "Revenue and Finance," to require that any increase in tax rates, changes to how maximum sales tax is computed, changes to tax exemptions or creation of new forms of tax shall be approved by at least 60 percent of voters at a regular election.
McBride said the group expects these initiative applications will suffer the same fate.
ACT filed another initiative Wednesday, this one an attempt to meet the objections that led to rejection of the capital projects initiatives. McBride said the latest initiative application does away with the retroactive January date in Application 2005-01 and substitutes April 15, thus avoiding the two capital projects already in the works. It also eliminates reference, he said, to operations.
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