Fairbanks residents propose switching property tax for sales tax

Posted: Wednesday, July 02, 2003

FAIRBANKS (AP) A group of Fairbanks residents has proposed a ballot initiative that would almost eliminate property taxes within the city and replace them with a 3 percent sales tax.

''It spreads the burden of paying for city government,'' said Ted DeLeon, a sponsor. ''I think what it does is evens it out.''

DeLeon, a retired teacher, delivered the application to the Fairbanks city clerk Monday. If a majority of voters approves the measure, it would take effect Jan. 1.

DeLeon said the concept has been discussed for about a year but that it gained momentum when Gov. Frank Murkowski vetoed $37 million in state aid to communities last month, prompting worries that city council members would raise property tax.

''I'm sure there are some of them looking at a possible increase to the property tax,'' he said.

DeLeon said the city's dependence almost exclusively on property taxes forces property owners to shoulder an unfair amount of the tax burden. He said a sales tax would touch everyone, including military and other nonresidents who do their shopping within city limits, using city roads and other services.

''We just feel that it can be dispersed over the whole community, not just in Fairbanks,'' he said.

The proposed ballot measure would limit the city's mill rate to 0.5 mills, or $50 tax per $100,000 of property value, unless 60 percent of voters approve a higher levy at a regular election. The current levy is 6.516 mills, or $651.60 per $100,000.

Ron Woolf, city chief financial officer, said the proposal probably would generate enough money to pay city bills, based on numbers from the last time the city had a sales tax.

Woolf said he did not believe a tax would drive people to shop outside city limits. In fact, he said, retailers outside the city might clamor for annexation since they could be provided with city services while paying little in property tax.

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