ECON 919 - Ballot Prop 2 - Sales Tax Cap Increase

Sep 20, 2019

 


Between all the mudslinging and negative social media ads, some of the candidates for borough assembly have actually taken the time to talk about their thoughts on one of the ballot propositions voters will decide in October.

 


 

 

About half the assembly candidates from the Central Peninsula sat for a forum hosted Wednesday by the Kenai and Soldotna Chambers of Commerce; Brent Johnson, Tyson Cox, Jesse Bjorkman and Joe Ross all showed up. John Quick, Holly Odd and Rose Henry were invited, but did not make an appearance or even submit statements.

 

The central question for those who were at the forum was whether the borough has a spending problem or a revenue problem. That tended to inform how favorably they view the ballot proposition, which will ask voters to approve an increase in the borough-wide sales tax cap, the maximum amount you would pay on a single purchase. That cap has been at $500 since the borough incorporated more than 50 years ago. The ballot proposition would raise it to $1,000. That translates to more than $3 million extra dollars into the borough budget each year.

 

Brent Johnson, running in District 7 around Kasilof and Glam Gulch, has been around for all of those 50 years and more. He says it’s time for the tax cap to go up, both as a function of keeping up with inflation and because for the average consumer, on the average shopping trip, hitting that cap isn’t much of a concern. A commercial fisherman, Johnson used buying an outboard motor as an example. The sales tax on that $10,000 purchases right now is is $15 bucks. If the ballot measure passes, it goes up to $30.

“Do we need new revenue? Well, we need to hold the mill rate down. Our mill rate (property tax) is among the lowest of the larger boroughs in the state. So if we’re going to hold that mill rate down and we’re going to fund schools, then we’re going to have to raise money and that’s one avenue to do it.”

Jesse Bjorkman, running for the Nikiski assembly seat, is also in favor of using a higher sales tax cap in order to keep property taxes low. As a teacher at Nikiski, he’s also concerned with having enough revenue to fully fund the borough school district.

“I would like to see the tax regime in our borough change so that we have forecasted out to adjust for peaks and valleys in borough revenue, and not run to working men and women in this borough and raise their property taxes to fix our problems easily. I think we need to redo the tax code in a responsible way so that we can have more of a consumption based tax and we can make sure that visitors to our communities are doing their part to help pay our tax burden.”

One of Bjorkman’s opponents for that Nikiski seat is Joe Ross. He runs a gravel and topsoil business. He says raising the tax cap is a measure he could support, but he doesn’t see the borough as having too little revenue right now.

 

“It’s like that bad house guest you have every summer. It keeps coming back. The public has voted this thing down, over and over again. But that said, if, IF the borough needs to increase revenues, I think that might be one way of doing it. But right now the borough budget is doing okay. If we need to replace state funds, that might be something to look at but right now, I’m against it.”

Tyson Cox, a property manager running for the Soldotna seat. His perspective is a little different, having served on the Soldotna city council where budgets are drafted using primarily sales tax dollars.

“We get most of our money from Fred Meyer through our sales (tax). And I can tell you right now, most people don’t spend $500. It’s all small sales. So if you’re looking to increase revenue, that is not the way to do it. If I were going to do any kind of new taxation, I would support a .5 percent increase on the sales tax (rate), only because that would hit most folks evenly.” (0:24)

That’s what some of the assembly candidates think, but voters will have the final say on sales tax on Tuesday, October 1st.

This week’s number: 59.69, percent. That’s the share of voters, as long as we’re on the subject, that rejected what was basically this same proposal back in 2017. It faired only slightly better when it was on the ballot in 2016. Fifty-seven percent of voters said no then.