Assembly puts off vote on sales tax

PALMER — The Borough Assembly decided Tuesday to hold off on a vote as to whether a sales tax ordinance will appear on an upcoming ballot.

The ordinance calls for a 3 percent borough-wide sales tax and a cap of property taxes at 7.8 mills. The proposed cap would reduce the current tax rate, which stands at more than 10 mills. City sales taxes — 3 percent in Palmer, 2.5 percent in Wasilla, and 2 percent in Houston — would be levied in addition to the borough tax.

Assemblywoman Cindy Bettine, who is sponsoring the tax ordinance along with Assemblyman Pete Houston, has said multiple times that the ordinance isn’t about generating more revenue for the borough and is instead a move toward tax diversification, bringing in dollars from folks other than property owners.

“It’s pretty close to revenue-neutral,” she said.

Originally, the ordinance had called for putting the tax to a vote of the people during the borough’s special election set for June 9 to select a replacement for the recently deceased Borough Mayor Curt Menard.

But the very first amendment the body passed was to change that date to put the tax on the borough’s general election ballot Oct. 6.

The assembly passed a string of other amendments, including shoring up the sunset clause, which would end the tax and the cap in 2014, if not extended by voters.

They also spent some time hashing out exactly what the tax would mean for the borough. In addition to capping the mill levy, Bettine pointed out, there is a measure exempting the first $10,000 of residential property from taxation.

Borough Finance Director Tammy Clayton said the amount of property taxes collected in the borough would reduce under the cap by $17.7 million.

Eventually, they voted to table the matter until June 2 — after the assembly has finished hashing out its 2010 budget.

In the audience, opinions of the tax were mixed. Some asked the assembly to decide on either a property tax or a sales tax, not both. Some opposed a sales tax outright. Others supported it as a means to get relief on rising property taxes.

John Nolin, who testified at a previous meeting about the sticker shock he got when his bill arrived this year, testified in favor of the tax.

“My tax assessments went up 30 percent on my buildings this year,” he said. “I hear what everybody’s saying but it’s not fair.”

Representatives from the cities asked for a sit-down with borough officials to go over how the plan will work. Many on the assembly cited the need to work with the cities as a reason for tabling the ordinance.

“I guess the thing that bother me the most is the lack of respect that this administration has for the cities,” said Palmer City Manager Bill Allen. Saying that even with the tax cap, property assessments can go up, thus inflating a person’s tax bill, he added, “It’s really kind of artificial to tell people in this community, ‘We’re going to cap your taxes.’”

Troy Tankersley, controller for Wasilla, said the borough needs to take a long hard look at how it’s going to levy the taxes and the start-up costs the program will involve. It’s a complicated system, he said, based on having once managed the Kenai Peninsula Borough’s system.

“To say $400,000 can get you there, unless you’ve got some really good programmers with good rates, which I seriously doubt, you can’t get there,” he said.

Marvin Yoder, a deputy administrator with Wasilla, said he worried about what a hike in sales taxes would do to local merchants, since it would put them at a disadvantage compared to Anchorage businesses that don’t have to contend with a sales tax.

“Will consumers still shop here or will trips to Costco become routine for the citizens of the Valley?” he asked.