"This is strictly a reaction to the initiative and basically it's a circumvention of the will of the people," said Nikiski resident James Price, head of Alaskans for Grocery Tax Relief Now, or AGTRN.
Price was referring to Ordinance 2008-28, which would authorize general law cities within the borough (Soldotna, Homer and Seldovia) to independently levy sales taxes on non-prepared foods, even if Proposition 1, the tax-free food initiative, eliminated the borough tax between Sept. 1 and May 30 each year.
State law restricts general law cities to taxing the same consumer items taxed by the borough. That same statute also authorizes boroughs to extend to general law cities authority to levy taxes on items not taxed by the borough. That action must be done by ordinance.
The Soldotna City Council adopted a formal resolution Aug. 13 asking such authority be granted prior to Oct. 7.
Homer, meanwhile, has taken the opposite approach, indicating that, like the borough, it wants to exempt non-prepared foods from taxation for part of the each year. Action on a city ordinance to do that has been postponed until after the election.
The "home rule" cities of Kenai and Seward already are empowered to tax beyond what the borough taxes.
Price said the borough ordinance, which gets a second public hearing Sept. 16 when the assembly meets in Homer, was a step toward a more complicated government, something that "alienates people from participating in it."
Assemblyman Pete Sprague of Soldotna questioned Price's position.
"You said this should be decided by the people who the tax is collected from. Isn't that what Soldotna is doing by asking for the option?" he asked.
Price said that decision would be made in the election.
Sprague also asked Price if he'd considered or discussed with city officials the impact the loss of tax revenue from foods would have on city coffers. Price said he had not talked directly with city officials.
Soldotna City Manager Larry Semmens said the city should determine its own tax policy, and that the tax initiative on the borough ballot could have a tremendous impact on the city of Soldotna's ability to provide services to its citizens. The borough finance department estimated the loss of revenue to the city at about $700,000 a year, or approximately 10 percent of the city's sales tax revenue.
Sales taxes generate about 90 percent of Soldotna's revenues, or better than $7 million a year. The city's 1.6-mill property tax levy produces about $800,000 a year, Semmens said.
Nikiski resident Vicki Pate, who also opposed the borough's Ordinance 2008-28, urged the assembly to table the measure until after the election.
Prop 1's language was written, she said, to be "grocery store friendly," because stores were already geared to exempt non-prepared foods from taxes for food-stamp users. Storeowners could face a problem if the cities instituted their own sales tax on food. If Prop 1 loses, the issue would be moot, she said.
Not necessarily. An open legal question at this point is whether city of Homer would have the option of moving forward with its ordinance eliminating the tax on food (Sept. 1-May 30) if Ordinance 2008-28 passes, but Prop 1 fails.
Borough Attorney Colette Thompson said it was not clear whether granting an option to tax other sources of revenue would also grant the authority to exempt. She said a liberal interpretation of the law appeared to indicate Homer might have that legal option. It is a matter still being researched, she said.
Roughly 74 percent of Homer's revenue stream is derived from sales taxes, according to the city.
Hal Spence is a reporter for the Peninsula Clarion.
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Homer Alaska - News -
Story last updated at
7:08 PM on
Wednesday, September 3, 2008
Tax-free food proposition backers take issue with assembly move to exempt cities
By HAL SPENCE
morris news service alaska
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