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Borough braces for tax shift

Assembly changes date for sales tax hike in case initiative passes

Posted: Friday, August 19, 2005

Facing an initiative-driven ballot proposition that would cap the Kenai Peninsula Borough’s sales tax at 2 percent, the assembly Tuesday unanimously approved pushing back a 1 percent increase in the tax rate scheduled to take effect Oct. 1 to Jan. 1, 2006.

Ordinance 2005-37 recognized that, should voters approve Proposition 5 on Oct. 4 and the election be certified by Oct. 12, the tax increase only days old would be repealed, causing administrative chaos.

“Significant confusion and administrative problems will occur if the current Oct. 1, 2005, effective date remains unchanged,” Troy Tankersley, sales tax division manager, told the assembly in a memo. “The implementation and enforcement of such a short change would be virtually impossible.”

Proposition 5 was the result of a petition drive by the Alliance of Concerned Taxpayers (ACT), which also was responsible for collecting sufficient signatures to add Proposition 4 to the fall municipal ballot, a measure that would limit the amount the borough assembly could spend on capital projects without a public vote to $1 million.

The sales tax proposition would roll back the scheduled increase and cap the sales tax at 2 percent and require that any future increase be approved by 60 percent of voters.

Borough voters approved a sales tax of up to 3 percent at the Oct. 6, 1964, municipal election, and the 3 percent tax remained in place until 1975, when it was reduced to 2 percent, the current levy. Arguing that a looming budget crunch required it, the assembly approved an increase to 3 percent earlier this year, making its effective date Oct. 1.

“I look forward to putting these issues out there and seeing what the people want to do,” said ACT activist James Price, of Nikiski.

Mike McBride, another ACT activist, said he was not at all surprised they’d acquired the necessary signatures. With the sales tax initiative they had just over three weeks, during which time they collected more than 2,200 signatures, far more than the 1,530 needed.

“The reaction we have had from the public all along has been one of basically, ‘Gee whiz, that makes perfectly good sense,’” McBride said.

As for the sales tax increase approved by the assembly, McBride said ACT has maintained all along that it was done illegally, and that while ACT has not forced that issue, it has resonated with the petition-signing public.

“It was not like we had to sell a reluctant citizenry,” he said.

With both Proposition 4 and 5, McBride said it was now ACT’s task to make sure the public is informed on the issues involved. He said his biggest concern was the language in the proposition summaries approved by the assembly. He sees them as biased in favor of “no” votes.

For instance, sales tax revenues help pay for schools, and McBride thinks the language implies schools would be impacted. The summaries don’t offer the alternative of further budget cutting, he said.

“That’s conversation that never comes out of the borough,” he said. “But, that’s just my opinion.”

The assembly approved four ordinances involving state grants Tuesday. Ordinance 2005-19-09 hands $14,190 to the Nikiski Fire Service Area for firefighting equipment. Ordinance 2005-19-10 appropriates $650,000 to the 2006 Arctic Winter Games Host Society. Ordinance 2005-19-11 approves spending $225,000 for a natural gas pressure reducing system at Ninilchik, while Ordinance 2005-19-12 frees up $71,000 for road access and utility extension to the Cooper Landing senior housing project.

In other business Tuesday, the assembly:

Postponed action until Sept. 20 on Ordinance 2005-13 that would clarify conditions for material site permits.

Enacted Ordinance 2005-19-08, appropriating a Denali Commission grant of $96,179 for a mobile air curtain burner at the borough landfill.

Enacted Ordinance 2005-19-15, appropriating supplemental funding of $63,602 to the special assessment fund for the West Brook Estates Road Improvement Special Assessment District.

Ordinance 2005-19-18, appropriating supplemental funding of $30,000 to cover the costs associated with Board of Equalization hearings.

Enacted Ordinance 2005-31, authorizing sale of 10 parcels of borough land by sealed bid.

Enacted Ordinance 2005-32, amending borough code to provide hearing procedures for Board of Equalization appeals.

Enacted Ordinance 2005-33, authorizing the Tsalteshi Trails Association lease to be amended to add additional land adjacent to Skyview High School to develop new trails and address retention of facility improvements.



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