Tax cap proposal at a glance

Alaska voters will decide in the Nov. 7 general election if the proposed tax cap initiative, listed as state ballot measure No. 4, will become law.

Following is the proposed language for the fall ballot:

"BALLOT MEASURE NO. 4

"INITIATIVE NO. 99PTAR

"Bill Limiting Property Assessment and Taxation

"This bill sets the value of property at its assessment on Jan. 1 of the first year the bill is in effect. The value of property is the price it would bring in an open market between a willing and informed buyer and seller. An assessment may not be raised more than 2 percent per year, with some exceptions. Property taxes are capped at 1 percent of assessed value for all municipalities. Taxes to repay bond debt issued after Jan. 1, 2001, are included in the 1 percent limit. Taxes to repay bond debt issued before Jan. 1, 2001 are not within the limit.

"Should this initiative become law?"

HEAD:Tax Cap Proposal: At A Glance

BYLINE1:By SHANA LOSHBAUGH

BYLINE2:Peninsula Clarion

The 2000 presidential campaign is a big deal, but for Alaskans the state ballot proposal to cap property taxes could be even more important.

Advocates say the straightforward initiative will pass easily, relieving landowners from burdensome taxes and pressuring municipalities to improve efficiency.

Opponents say informed voters will turn down the poorly crafted proposal, which would gut popular services and create a quagmire of inequities and legal confusion.

"The issue is: What's fair?" said Jim Nelson of Anchor Point, the informal Kenai Peninsula liaison for Tax Cap Yes, the campaign arm of Alaskans for Property Tax Reform.

On the other side, tax cap opponents announced Thursday that Don Gilman, former Kenai Peninsula Borough mayor, will represent Alaskans United Against the Cap, serving as vice chair for the Kenai Peninsula and the southcentral coastal areas, excluding Anchorage.

Gilman and other critics charge that although tax cuts are always popular, the attractions of this tax cap fade quickly when people start looking at the effects it will have.

"If people don't want their permanent funds taken away, they had better vote 'no' on this," he warned.

"(People) may vote for this, but they will not stand for their schools being shut down."

Neither group has planned specific campaign activities for the Kenai Peninsula at this time, but future forums and public discussions are likely, they said.

The controversy began when Anchorage restaurateur Uwe Kalenka started a petition drive, inspired by California's 1978 Proposition 13, to cap property taxes. He and his supporters gathered enough signatures to put the issue to voters this fall.

Nelson said he has long favored limits on property taxes.

As a person who built his own house, he feels that his labor has been taxed over and over, rather than once as would be the case with income tax.

"We should be creating an incentive for people to improve their property," he said.

About two years ago, he spoke about the issue before the Kenai Peninsula Borough Assembly and was disappointed by the lack of response.

When he heard about Kalenka's efforts, he contacted him about a year and a half ago and offered to get involved.

Nelson helped with the petition drive to put the proposition on the ballot. The petition drive efforts were focused on other parts of the state, but about 1,000 signatures were collected on the peninsula, he said.

He challenged the criticism that the cap would create disparities in tax levels between owners who bought homes long ago versus new buyers of comparable property.

Disparities would have some advantages. They would favor people on fixed incomes and help keep people in their homes. Newcomers, who would pay more, are the same people who cost municipalities more by requiring increased services such as new schools or new roads, he said.

He reacted strongly to those who say reducing housing turnover is bad for the economy.

"I find it incredible they think that is a negative," he said.

Although Nelson supports the tax cap, he parts company with Kalenka and others in the group on several spinoff points.

"I don't know how much politics I share with him," said Nelson, who described himself as a liberal.

Kalenka has gone on record saying municipal services such as schools and police should be cut.

Nelson said he personally favors other revenue sources, including a state income tax, rather than cuts in services.

"I am not looking to jettison any of them, with the possible exception of the board of equalization and having the assessors come around," he said.

Imposing a 5 percent sales tax in Anchorage would take care of the city's shortfall and help the retailers in other parts of the state compete, he said.

Gilman, not surprisingly, has a different point of view.

Borough assembly member Tim Navarre, Alaska Municipal League executive director Kevin Ritchie and Alaskans United Against the Cap chairman Ernie Hall have been discussing the campaign with him over the past couple weeks and recruited him to help defeat the cap proposal.

"The thing has emanated out of Anchorage," he said. "In my opinion, what was essentially an Anchorage problem is being put out to the state to solve."

Gilman described the tax cap as an example of Anchorage people trying to run the rest of the state, a recurring problem he has seen during 35 years of public service. Problems with taxes and spending in Anchorage should be resolved within Anchorage.

The originators and leaders of the tax cap initiative do not care how it would effect other parts of the state, he said.

"It is poor public policy. It is not thought out at all," he said.

Gilman and other critics say that, if passed, the ballot measure would unleash a host of complications.

One is the fate of the state-mandated 20-mill tax on oil and gas industry assets. Revenue from the tax is divided between the state and municipalities.

The ballot issue would transfer large amounts of that money out of oil-producing areas, including the Kenai, and redirect the funds to state coffers.

"It effectively wipes out the North Slope tax base," he said.

Gilman also criticized the initiative's timing.

If the measure passes, it goes into effect Jan. 1, 2001. Municipalities will not have time to change budgets or arrange other revenue sources, he said.

"Nobody will have any room to maneuver. You cannot pass a sales tax without a vote," he said.

The cap's opponents have detailed those and other arguments on a Web site, www.againstthecap.org.

The tax cap advocates also have a site at www.taxcap.org.

Nelson said his group does not plan a big campaign effort because their initiative sells itself.

"This thing is going to pass if we do nothing," he said. "This is the greatest opportunity the property owners are ever going to see."

Gilman disagreed.

"The general public will have to figure out another way," he said.

Public education is key to stopping the initiative, because once people understand the trouble the cap would cause they will see it is no bargain, he said.

"It is easy to shoot your foot off one toe at a time," he warned.