Grocery Tax Exemption Back Before Assembly

Jun 2, 2017

The Kenai Peninsula Borough Assembly will take yet another look at adjusting the boroughwide sales tax exemption on nonprepared food items. Assembly Member Dale Bagley, who sponsored the ordinance, says that with budgets tightening, this is a more palatable alternative to raising property taxes.

“We’re looking at a mill rate increase, which I really don’t want to do. And I’ve never liked that the nonprepared food was nine months not taxed, three months taxed. I think six and six is better... . That would help us with balancing the budget.”

He says that the revenue created by collecting sales tax the extra three months will bring in about $1.3 million. Revenue generators are on the table right now because the political support for much more budget cutting just isn’t there, he said.

“The interesting part is I have things I would like to cut, but I'm not sure I have the votes from the assembly to do. And that's kind of the way other assembly members are, they have things they want to cut that they don't have the votes for. That part is probably a little frustrating. I think this failed the last time that I tried it because someone had another idea on how to raise revenue that did not happen, and so they didn't vote for this (exemption adjustment). Different people have different ideas of how to solve the problem and no one can get the votes to solve the problem."

There’s been sort of a serve and volley back and forth on this issue for a couple years. Supporters say lifting the sales tax exemption puts more money into borough coffers from nonborough residents. Opponents say the money it does bring in doesn’t justify a tax that hits lower-income residents harder.

“My response is that we're either going to lose $4.7 million out of the general fund this year, unless we raise the mill rate. Quite frankly, I'd rather do a sales tax that's taxing everybody including all the tourists who come here, than raise property tax on property owners. So for me, it's a real simple issue."

The assembly will vote on this one when it meets next, June 6.