Borough voters reject taxes

$1 million spending cap still close; sales taxes rolled back to 2 percent

Posted: Wednesday, October 05, 2005

Kenai Peninsula voters apparently agreed Tuesday that a 2 percent borough sales tax was quite high enough and that a supermajority of voting residents ought to decide whether the Kenai Peninsula Borough Assembly should exceed that rate in the future.

Voters also apparently have given notice that the same supermajority will be necessary whenever future assemblies decide they want to appropriate more than $1 million toward any capital project.

By a fairly strong majority of 54 percent to 46 percent, voters said yes to Proposition 5, which caps the borough sales tax at 2 percent of the first $500 of a retail sale, effectively negating an assembly decision reached earlier this year to raise it to 3 percent beginning in October (later changed to January 2006). It got 4,793 "yes" votes to 4,038 "no" votes.

Prop. 5 also stipulated that any future increase would require ratification at the polls by at least 60 percent of voters.

Meanwhile, the results of a controversial measure that aimed to cap the amount the assembly could appropriate toward a capital project without an election at $1 million (it is currently $1.5 million) were much less clear late Tuesday night. With all 26 precincts reporting, only 96 votes separate the yeas from the nays. The tally was 4,412 to 4,316, or 50.5 percent to 45.5 percent.

Proposition 4 also requires a 60 percent supermajority before capital expenditures toward a particular project could exceed $1 million.

That measure may have to wait for absentee and questioned ballots to be counted before the results are known for sure.

Opponents of both propositions had argued that their success, with the supermajority provisions, would leave a minority able to thwart the desires of the majority, even if that majority was as high as 59.9 percent. That argument did not sway enough voters.

Both propositions made the ballot following a concerted signature-gathering effort by a group of citizens calling themselves the Alliance of Concerned Taxpayers.

Frustrated by the assembly's decision earlier this year to raise the sales tax from 2 percent — where it had been since 1976 — to 3 percent, ACT launched a petition drive that resulted in placing Prop. 5 on the fall ballot.

The Kenai Peninsula Borough Assembly had elected to raise the sales tax to meet rapidly rising education costs, since sales tax revenues go to education. ACT members argued that such an increase was unnecessary and the education money could be found elsewhere in the borough budget.

As for Proposition 4, ACT launched that petition drive in the hopes of doing boroughwide what had recently been done in the North Peninsula Recreation Service Area. A similar voter initiative in 2004 succeeded in limiting the amount that service area's board could spend without a service area election.

"We are not surprised" by the result, "but I'm a little surprised by the margin," said ACT spokesman Mike McBride of Nikiski. "Our research had showed the concept was popular. We had expected 60 percent or more on both of those."

McBride said he had not yet had a chance to analyze the results precinct by precinct. He rejected arguments that education funding would suffer as a result of the success of Prop 5.

"The thing about education is that it is currently funded to the cap. And it will be in the future," he said. "Even with less revenue it will be funded to the cap. This community has always been supportive of education and so are we (ACT)."

He warned, however, that everyone would have to "take a close look" at how the school district and borough spend money to make sure it is done as efficiently as possible.

"Maybe we should hire an outside consulting firm that specializes in municipalities and do a top-to-bottom efficiency audit to see if we are getting the maximum out of our tax dollars," he said.

McBride said Props. 4 and 5 neither prevent capital spending in excess of $1 million nor prevent future increases in the sales tax.

"Only now the people are involved," he said.

He went on to promise that ACT would forward a proposition to cap borough property taxes soon.

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