Alaska Voters to decide California-style tax cap initiative

Posted: Wednesday, October 18, 2000

ANCHORAGE (AP) -- Alaska may seem like an unlikely breeding ground for a tax revolt.

There is no state income or sales tax and nearly every man, woman and child who makes their home here received a dividend payment this month of $1,963.86 from the state's oil wealth savings account.

Nevertheless, Alaska voters will find a California-style tax cap initiative on the November ballot that would limit property taxes throughout the state to 1 percent of a property's assessed value. In addition, property value assessments could rise no more than 2 percent a year.

The tax cap is the brainchild of Uwe Kalenka of Anchorage, a 55-year-old restaurant manager who favors a stripped-down style of government.

''Water, sewer and roads are essential. Police and fire protection are essential, but they don't do much good if you don't have roads,'' Kalenka said. Anchorage's city government has gotten bloated and a tax cap will force city officials to streamline operations and save money, he said.

Surprisingly, Kalenka doesn't have much of a property tax bill. He doesn't own a home and paid a total of $59 in taxes last year on remote property north of Anchorage. His tax crusade began after a frustrating attempt to challenge the city's property tax assessment on behalf of elderly friends.

His tax cap idea apparently struck a nerve with Alaskans. Kalenka gathered 40,000 petition signatures, almost twice the number needed to get the issue on the ballot.

The initiative would cut an estimated $150 million from local budgets across the state. That's raised alarm bells among civic leaders from Ketchikan to Nome who say it will wreak havoc with public services and facilities.

Opponents of the measure warn of crowded classrooms, snow-clogged streets and reduced hours at recreation centers, museums and libraries if the measure passes. They say numerous taxes and fees will have to be imposed to make up the lost revenue.

Municipal officials complain the measure would take away local authority to decide spending priorities.

Proponents of the tax cap point out that state law already limits property taxes to no more than 3 percent of a property's value. Kalenka says the talk of cuts in services amount to nothing more than scare tactics.

Ernie Hall says when he talks taxes with friends and family members from the Lower 48 ''they roll their eyes.'' Hall chairs a group fighting the tax cap initiative.

Hall says he's seen Anchorage evolve over the past four decades from a frozen, lonely outpost to a pleasant place to live and work and he doesn't want to see the clock turned back.

''I know where we came from,'' Hall said. ''I would love to pay no taxes, but I feel we get a pretty good bang for our buck.''

Bike paths, parks, the city's performing arts center, museums and libraries have made life in Anchorage better, he said.

''The reality is that, when you're talking about what we as individuals pay in taxes, it's pretty insignificant when compared with other states,'' Hall said.

Gerald McBeath, a professor of political science at the University of Alaska Fairbanks, concurs.

''We're still in Never-Never Land as far as taxation is concerned,'' McBeath said. ''We have very low property taxes as opposed to other states.''

Anchorage, where about half the state's residents live, ranked 19th last year in terms of property taxes, according to a survey of the largest cities in each of the 50 states.

The annual survey, conducted by the Washington D.C. Office of Tax and Revenue, put Anchorage residents at the very bottom of the list in terms of their total tax burden. The study did not take into account the Alaska Permanent Fund dividend payment that residents receive each year.

Alaska's taxation rankings relative to other states don't move Kalenka.

''Do we want to make the same mistakes they made? That's why we moved up here,'' said Kalenka. ''If NASA can be privatized I'm sure some of our city departments can be privatized.''

Kalenka's crusade is already having an impact on spending in Anchorage. Mayor George Wuerch says he will base his budget for next year on how people respond to the tax-cap initiative. If it fails by a wide margin, he will ease up on proposed spending cuts. If the measure fails by a narrow margin, he will go with deeper cuts in next year's budget.

Wuerch says the idea is to show tax-cap supporters that the city is aware of their concerns.

While the tax cap idea started off strong, polls show support appears to be waning.

A survey of 518 Alaskans taken by Dittman Research of Anchorage during the last week of September found that 48 percent of those polled planned to vote against the cap while 39 percent planned to vote for it. Thirteen percent were undecided. The survey had a sampling error of 4 percent.

But Kalenka says he doesn't pay much attention to the polls. Even if the measure fails in November, he says the tax cap proposal has brought much-needed attention to government spending.

''We feel we've already won. Whatever comes next is gravy,'' he said.

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