A discussion about taxes in the borough is looming. Throughout the budget process this spring, the question of what kind of tax is most fair has been raised, but another question is being asked, too.
What about tax exemptions? The borough has several exemptions that, collectively, may have staved off the budget deficits in recent years had they been collected. We have some idea of how popular tax exemptions are.
Two years ago, voters shot down a proposal to do away with additional property tax exemptions for seniors. As it stands, borough residents age 65 and older are exempt up to the first $350,000 in property value. Some of that number is state mandated, but it costs the borough around $9 million. More than enough to cover recent budget shortfalls. And getting some of that money back into borough coffers is not exactly low hanging fruit, says assembly member Hal Smalley.
“When it comes time to make a decision as to what’s going to go away, it’s going to be tough. It’s going to be really tough. I do know we are losing some revenue there. And I do know that seniors have made a significant contribution. But the fairness of having younger folks pay that difference in tax, pay that burden, it’s not fair. It’s not right.”
The state mandates $150,000 of that exemption, and Smalley’s colleague on the assembly, Dale Bagley, says the only way to do away with the borough’s portion is if the state raises its number.
“I think the takeaway on that particular issue is that the Kenai Peninsula Borough is very generous. I know it’s going to be tough to ever do anything about that. I think what will probably end up playing out is at some point, maybe many years in the future, the state will raise the mandatory amount. And eventually the state raising the mandatory amount will catch up to where we are.”
So if property tax exemptions aren’t the answer, what about the exemptions on seasonal grocery taxes? Repealing those, at least a little, has been tried before, too. Voters, unsurprisingly, supported getting rid of grocery taxes for nine months out of the year, and leaving it in place during the summer when tourists would pick up a share of the burden. Bagley says he’d like to see that holiday limited to just six months.
“There was an initiative to get rid of the tax on groceries nine months of the year and that had a huge financial impact on the borough and those are things that we’ve had to deal with and I think if that hadn’t been there, we wouldn’t have been having any sort of a problem at all if the grocery tax had stayed where it is. I do have an amendment to put that on the ballot for a vote, so that’s something that will possibly be on the ballot this fall if the assembly supports putting it on.”
That could be a tough sell just at the assembly level, though, depending on details about borough mayor Charlie Pierce’s newest plan. What had initially been introduced as a ‘sin’ tax on alcohol, cannabis and tobacco has been modified. The mayor is proposing an excise tax on tobacco products, but details for that plan are still being worked out. In the meantime, the assembly will debate putting both a bed tax and Bagley’s grocery tax on the fall ballot when it meets again June 19th.