Sales vs. property

PALMER — The Borough Assembly is considering a sales tax and, so far, the head administrators in Houston, Wasilla and Palmer aren’t happy.

“I can almost assure you that our merchants are not going to be pleased with this,” said Palmer City Man ager Bill Allen.

Wasilla Mayor Verne Rupright agreed with Allen.

“I just don’t get it, other than they’re going after the money the cities are getting,” Rupright said.

Up in Houston, Mayor Roger Purcell is similarly opposed.

“We’re going to get taxation without representation inside the cities,” he said.

The tax, as it has been proposed, would be levied at 3 percent across the borough. But the cities already have a sales tax — 3 percent in Palmer, 2.5 percent in Wasilla, and 2 percent in Houston. The borough tax would stack on top of the city tax — essentially doubling the tax rate. The Borough Assembly is due to vote on whether to put the measure to a vote of the people Tuesday.

Cindy Bettine, represents Big Lake on the assembly and, along with Pete Houston, who represents Palmer, is sponsoring the bill. She said the sales tax is an effort to even out what’s a deep uneven taxation system.

“Right now, the majority of the local taxes that are collected are through the property tax,” Bettine said. “It is an unfair situation.”

The ordinance she’s pushing for, she said, includes a capping on property taxes at 7.8 mills. That would be a significant reduction, she said, from the current property tax levy of 10.23 mills.

“I will not support a sales tax without an areawide property tax cap,” Bettine said.

She also pointed out that the tax cap would apply to borough property taxes collected everywhere — municipal residents would get the same reduction as those outside of cities.

When she hears that cities are opposed, she said, the first question that comes to mind is, “Are you talking about what does the administrations think about it or are you talking about what do the people within the cities think about it?”

At the Borough Assembly’s March 13 meeting, the body heard from a local taxpayer who echoed much of Bettine’s sentiments.

John Nolin said he’d come to the meeting, in his words, to whine about the sticker shock he experienced when he received his property tax bill. 

“I’m paying a lot of tax money now,” Nolin said. “You need to start spreading that burden out to other people.”

But the cities say they’re worried about a number of things.

First, Allen said, there’s the effect it will have on local business.

“We want people to open businesses here and be competitive and generate jobs,” Allen said. “We don’t want to be in the situation where we’re gouging the consumer.”

And he, like the two city mayors, questioned what the tax money will be used for.

“I served on that body (assembly) and it appears to me that they are well-managed, they have good liquidity, they have good cash flow, they have expansion plans,” Allen said.

On that point Bettine was clear — the tax will be used to offset property taxes, not to raise more money for the borough.

Rupright raised the question of how the taxes will be collected. The sales tax, for Wasilla, is really the city’s bread and butter. He’s worried about having to rely on the borough to hand over the cash when the city starts having to cut checks.

Purcell raised much the same issue, saying that when flooding hit the borough in 2006, Houston was late in getting its share of property tax revenue.

“I’m sorry that they had a flood but we’ve still got a city run,” Purcell said.

Both Purcell and Rupright said they’d be on board with a sales tax that was levied everywhere but inside the cities. In explaining why, Purcell brought up a gripe somewhat common in his neck of the borough.

“Seeing as how the borough doesn’t provide any functions other than schools inside the cities, they should exempt the cities.”

But, Bettine said, the tax simply won’t work if it was implemented that way.

“It’s dead in the water if we did that. That’s the way I see it,” Bettine said. “You wouldn’t be able to cap the mill rate if we did that.”

And she doesn’t see a reason to. Borough residents from outside the city shop in Wasilla and Palmer all the time and it’s fair that their areas benefit from a portion of the taxes they pay. Tourists and visitors passing through on the Glenn and Parks highways utilize a lot of borough services but don’t pay for them. A sales tax would be a way to capture some of the money those folks spend.

Plus, the cities benefit from lots of borough services, she said. Just this year, she said the bulk of the borough lobbying efforts have been directed at the cities. The borough’s top lobby priority has been obtaining state matching funds for a raft of road projects, most of them inside either Palmer or Wasilla.

“We’re all in this together,” she said.

And, she said, really all they’re doing is putting it to a vote.

“I’m getting a lot of e-mails that are for and against my idea,” she  said. “It’s about even right now. It’s a toss up, really.”