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Council preserves food tax exemption

Posted: January 24, 2013 - 1:51pm

BY MICHAEL ARMSTRONG

STAFF WRITER

On a second vote to repeal a seasonal sales tax exemption on food, the Homer City Council again defeated the ordinance proposed last year by council member Bryan Zak. 

This time, with council member Beau Burgess switching his vote, the council fell two votes short of passing the controversial ordinance. As before, Zak and council member Francie Roberts voted yes, and council members James Dolma, David Lewis and Burgess voted no.

Council member Barbara Howard was absent on Monday and at the Dec. 10 meeting when the vote first came up, but had said earlier she would have voted against it. Council actions need four votes to pass.

If approved, Ordinance 12-53(S) would have repealed a Sept. 1-April 30 sales tax exemption on nonprepared foods. That seasonal exemption came about after a Kenai Peninsula Borough vote on a citizen initiative that created the tax holiday on nonprepared foods. In 2009, the council put the question of keeping the tax to Homer citizens, and they voted overwhelmingly for the seasonal exemption.

According to the latest Cooperative Extension Service survey, a family of two adults and two children in Homer pays $165.30 a week for groceries. If Zak’s ordinance had passed, added to that would be 4.5 percent in local sales taxes, or $7.44 more a week or about $390 a year, roughly the annual cost per lot over 10 years for the Natural Gas Homer Special Assessment District if it passes (see related story, this page).

The vote came up again because Dolma had asked for reconsideration. Under council rules, a council member on the prevailing party in the vote — in this case, the no votes — can ask for another vote. Dolma said he asked for reconsideration because the first time he also had been considering another ordinance as well, one by David Lewis that would have redefined nonprepared foods to include foods like frozen meals and ice cream.

As when the ordinance came up in December, public testimony on Monday was generally against the repeal of the exemption.

 

 

“I think it’s a very regressive tax,” said Steven Hooker. “It’s a tax that hurts children and the poor.”

“The taxation of food is immoral,” said Dean Ravin.

“To have a tax on food or nonprepared food is a hostage situation,” said Michael Kennedy. “It’s not something that can be avoided.”

City attorney Tom Klinkner had to take a time out to research a question raised by Burgess: Would a set of amendments to the 2013 budget introduced by Zak also take effect if his sales-tax ordinance passed on reconsideration? Klinkner said yes, that the council had approved those amendments contingent on the sales-tax change taking effect but dying if it failed. The council passed a balanced budget without Zak’s ordinance, but his amendments did fund things like depreciation and a 2-percent cost of living increase for city workers.

Lewis said he didn’t like that some nonprepared foods were included in the definition, but he said he would again vote against it.

“It is tough times,” he said. “That’s why I will be voting no.”

Zak defended his ordinance.

“This is not designed to take money away from needy people who can’t put food in their mouths,” he said. “It’s providing city services to the greater good of the whole.”

Burgess said balancing the budget is important, but that he didn’t think a food sales tax was the right tool in the city’s tool box to fund city services.

Mayor Beth Wythe, who only votes in the event of a tie, said she was opposed to doing away with the seasonal sales tax exemption.

“I’m opposed to reinstating this tax when the voters have voted against having this tax,” she said.

Wythe noted that she first ran for city council out of a frustration at the council’s response to an earlier citizen vote increasing the footprint for large retail stores.

“The council determining for me on behalf of a voter that I did not understand what I was voting on is the reason I sit at this table,” Wythe said.

Wythe said city residents need to look at the larger issue of how you pay for desired services with a limited revenue base. 

“If we can’t provide the services the community has asked for if they will not provide the revenue, I don’t have a problem saying no,” she said.

Michael Armstrong can be reached at michael.armstrong@homernews.com.

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