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Prop 2 ties hands of borough: Without ability to use all finance tools, schools, property owners could suffer

Voices of the Peninsula

Posted: Monday, September 25, 2006

Citizens For a Positive Future was formed to tell the voters the real truth, and to help you understand a very confusing Borough Proposition 2. One of our Co-Chairs, former Borough Mayor Mike Navarre has said, “The Kenai Peninsula Borough is at a crossroads. Its future and the future of its young people depend on the direction we take at the October 3 election”.

THE TRUTH IS: If you are FOR A POSITIVE FUTURE for our Borough, you should vote “NO” on Prop 2. If you are FOR SCHOOLS, you should vote “NO” on Prop. 2. If you are FOR REASONABLE PROPERTY TAXES, you should vote “NO” on Prop. 2.

LEGAL AUTHORITY: In 1964, Peninsula voters granted the Borough the authority to charge a 3 percent Sales Tax to fund schools. This was part of a multi-year effort to reasonably balance the local tax burden at approximately 40 percent Sales Taxes, and 60 percent Real Property Taxes. In 1975, the Assembly reduced the Sales Tax to 2 percent on the first $500, but the authority granted by the voters to go back to 3 percent, if needed, remains. Property owners now pay 70 percent of the bill, and that is not fair. Ordinance 2005-09 was passed to help correct that problem.

SALES TAX vs. PROPERTY TAX: All Sales Tax revenues are devoted exclusively to schools, however those taxes only pay a portion of the School District budget. This year, at the 2 percent rate, more than half of the School District budget was funded by property taxes and a $5 Million one-time state grant. We cannot expect that the state will always provide grant funding for our schools and borough expenses. Our elected officials must have the ability to balance the budget using every available tool, and Ordinance 2005-09 provides one of those tools.

VISITORS HELP PAY: The Borough Assembly and Administration have NO immediate plans to raise the sales tax rate. Should future School District budgets not receive additional state grants, however, the Assembly needs all of the tools possible to provide a balanced budget, including raising the tax 1 percent (one penny for every dollar spent on taxable sales). According to economists, that could generate additional revenues of $8 million, with 1/3 paid by visitors. Using current assessed values, the mil rate would have to be increased by 1.67 mils ($167 per $100,000 assessed value) to raise that same amount of money. In addition, increasing the mil rate by 1.67 would put property taxes right at the maximum allowed by law.

EFFECTS OF PROP 2 ON SCHOOLS: If Proposition 2 is defeated, the Sales Tax law remains the same as passed by the voters in 1964. If Prop. 2 is passed, the authority to raise Sales Taxes is removed, and the Assembly must look at increasing property taxes to fund our schools. If tax revenues are insufficient, the Assembly and School District must look at laying off teachers, consolidating schools, eliminating extra-curricular programs (athletics, music, and drama), raising property taxes, or a combination of all of these options.

EFFECTS ON OTHER SERVICES: The Borough hopes to continue their support of senior services, the landfill/garbage transfer sites, transportation services, emergency services, hospitals, road maintenance, and a wide variety of other services without placing them in competition with schools for available tax dollars. Should Prop. 2 pass, the Assembly must choose between eliminating services, rearranging the mil rates dedicated to these services, or raising property taxes.

ALL living former mayors — DALE BAGLEY, MIKE NAVARRE, STAN THOMPSON, AND GEORGE NAVARRE — OPPOSE the passage of Proposition 2!

We hope you will join us in moving toward a POSITIVE FUTURE by voting “NO” on Borough Proposition 2.



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