ACT turned away again

For the second time in a month, the Kenai Peninsula Borough clerk has denied certification of an initiative application filed by the Alliance of Concerned Taxpayers.

Relying on the analysis of the borough’s legal department, borough clerk Sherry Biggs told initiative sponsor Victoria Pate the initiative petition application, designated as 2006-02 “Tax Increase Limitation,” would violate established case law and unlawfully take out of the borough assembly’s hands the power to levy taxes.

Pate, of Nikiski, could not be reached for comment.

As proposed, the initiative would have led to an Oct. 3 municipal ballot measure that could have limited the assembly’s taxing authority. If approved by voters, the measure was to have linked the borough’s taxing ability to the Anchorage consumer price index and changes in the borough’s population.

Specifically, ACT proposed that increases in the total tax levied during a fiscal year not exceed that of the preceding year by more than a certain percentage, which would be determined by adding the percentage increase in the Federal Urban Consumer Price Index for Anchorage from the preceding fiscal year to the five-year average percentage growth or decline in borough population figures.

But for several reasons not dissimilar to those used to justify rejecting the earlier version of the initiative application on May 9, Biggs declined to certify the application.

The initiative, as written, would be difficult to interpret and administer and would appear to require writing further rules and regulations, Biggs said. It also posed enforcement concerns, she said.

Among other things, Alaska law requires the assembly establish the mill levy, and the borough is not free to deviate from that process, she said.

Biggs cited a 1980 Alaska Supreme Court decision (Whitson v. Anchorage) in which the justices held that requiring ratification by voters before the assembly could increase taxes plainly conflicted with and contradicted language in Alaska law. The assembly could not delegate its power to levy taxes, which is what the initiative would effectively do.

Further, the assembly would be violating the initiative if it established a mill levy without applying the initiative’s specific formula, Biggs said.

“The provisions of Initiative Application 2006-02 directly impact the assembly’s ability to establish the annual mill levy,” she wrote in a letter to Pate.

“Additionally, the initiative binds future assemblies’ ability to establish the mill levy, which violates the proposition that a municipal assembly may not bind itself to future legislative action. An initiative cannot accomplish what the legislative body cannot.”

Biggs said the proposed initiative would be more restrictive than the case decided in Whitson v. Anchorage. That case provided that a mill levy increase could occur if approved by voters.

“Initiative 2006-02 bans an increase outside the formula provided,” she said.

ACT’s initiative included four exceptions when the proposed formula would not be applied. They included taxes on new construction or property improvements that occurred during the current fiscal year; taxes required to fund additional voter-approved services; special taxes authorized by voters; taxes required to fund the cost of court judgments against the borough or to pay principal or interest on bonds, including revenue bonds.

The construction exception, Biggs said, could result in a “differential tax rate,” which would violate state law.

It was not clear just where the additional services exception would be applied, she added.

The third exception, regarding paying the costs of judgments or principal and interest on bonds, including revenue bonds, led to questions of interpretation, she said.

The fourth exception regarding special appropriations raised additional concerns about the legality of the budgetary constraints the initiative would place on the assembly.

When the original petition application was rejected, ACT President Mike McBride said it had been expected, and ACT was preparing to launch a fund-raising effort to secure the funds needed to challenge the borough’s decision in Alaska Superior Court.