Some members of the Kenai Peninsula Borough Assembly feel it’s time to look at the Borough’s sales tax cap. The Assembly debated how many voters it should take to make a change to the tax at its last meeting.
Right now, the Borough’s sales tax is only applied to the first $500 of a purchase. The ordinance the Assembly debated didn’t change that. But it did change the number of votes necessary to increase the cap.
We need to go back a few years to find the controversy here. In 2005, a voter initiative passed that required a sixty-percent majority to increase the sales tax. But here’s the rub: that initiative passed with about 54 percent in favor.
“It creates, really, a dilemma,” said Borough Mayor Mike Navarre.
“It is something that I think is confusing and quite frankly think that if it were voted on and passed by 50-plus-one percent, I think the courts would uphold it. I think that the way it’s drafted currently is not appropriate.”
The basic argument for making this change is that when voters approved this cap almost a decade ago, they didn’t hold themselves to the same standard as this new cap. Less than sixty percent said that at least sixty percent would be needed to change the sales tax cap.
And for the measure’s sponsor, Brent Johnson, the time has come to increase that cap, which was originally set almost fifty years ago.
“It is subject to inflation. And inflation is just as sure as death and taxes,” Johnson said. “I bought an outboard last week, cost $9,500. My sales tax to the Borough on that was $15. It’s rather insignificant. And so, while this thing stays the same, inflation goes on.”
But opponents weren’t worried about inflation. Most who spoke against the ordinance didn’t cite economic reasons for keeping the sales tax cap at $500. They didn’t like that the Assembly was trying to overturn a decision the public made on its own.
Assembly member Charlie Pierce said lowering the voter-threshold for increasing the cap was just another path to the trough for Borough government.
“This is another methodology, an easy access for the Mayor or this Borough Assembly or the administration or staff in the Borough to have access to additional dollars that they have yet to even come to the table an identify a need for.”
But Johnson and other supporters framed it as an equality issue. Why should 54 percent of the people say that 60 percent are needed to overturn their decision? Why not 70 or 80 percent?
“And for that reason, it shouldn’t stand. It shouldn’t stand that a minority of the people control a majority. I don’t think that that’s right,” Johnson said.
But in this case, the majority of the Assembly felt that a simple majority is all that should be necessary to change the sales tax cap. If that question should ever come up…