Voters turn down fuel tax by nearly 2-to-1

Posted: Wednesday, June 26, 2002

FAIRBANKS (AP) -- Residents of the Fairbanks North Star Borough soundly rejected a proposed fuel transfer tax Tuesday, putting an end to the latest chapter in the argument over reducing property taxes.

Voters rejected the idea of a 2 cents a gallon tax by nearly 62 percent to 38 percent. With all but absentee and questioned ballots counted, 4,905 votes were opposed and 3,028 votes were in favor.

''At this point we would like to hear what other alternatives people in this community would like to offer,'' Merrick Peirce, the main force behind the tax proposal, told the Fairbanks Daily News-Miner.

Peirce and his supporters had pushed the tax as a way to reduce property taxes by about 40 percent. They said the plan would raise about $24 million annually for the borough, which this year had a budget of about $100 million.

But whether the tax would have raised that amount of money was a key point in the debate. The tax would have applied to the first transfer of gasoline, heating oil and jet fuel within the borough or refined in the borough and transported out.

Most of the money would have been derived from jet fuel produced at the Williams Alaska Petroleum Inc. refinery in North Pole. Most of that jet fuel is shipped to Anchorage but would have been subject to the tax.

Williams, which poured most of the money into the campaign against the tax, had said it would not pay the tax if it passed and that the borough would have to sue to get it.

Williams Alaska believes state law exempts jet fuel from such local taxation. Without jet fuel in the mix, the fuel tax would bring the borough an estimated $5 million annually, for a property tax reduction of 8 percent.

The issue landed on the ballot because of Peirce, who formed the group called ''A Bright Future for Fairbanks'' and gathered more than 2,000 signatures to bring the issue to a vote.

Both sides, while disputing the legality, fairness and economic impact of the tax, agreed it would be tied up in a lengthy court fight had it been approved and that the borough would not see any revenue for years.

Tax supporters argued that putting more money in the hands of property owners would stimulate the economy. They also said that lower property taxes would help attract business.

Tax opponents said higher fuel costs would raise the cost of doing business and thus turn businesses away. They also said the tax would send an ominous message to business: that a single industry can be singled out for taxation.

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