Assembly rejects sales tax plans

July 15, 2005

DARRELL L. BREESE\Frontiersman reporter

PALMER -- Then-candidate for president George H.W. Bush said, "Read my lips: No new taxes," during the 1988 Republican convention.

Mat-Su Borough voters have echoed the former president five times since 1991 when asked to adopt an areawide sales tax.

Borough assembly members appear to have finally heard the message, voting down an ordinance, 4-2, that would have placed the question of adopting a 2-percent sales tax on the October ballot.

The proposal for the new tax came just eight months after nearly 60 percent of Valley voters snubbed a 1-percent sales tax proposal.

"I've heard it loud and clear," Assembly Member Jim Colver said. "The voters have turned this down five times already. They've said they don't want sales tax right now. I can't speak for the other members, but that is what my vote reflects."

The vote means that when residents step into the voting booth in October, they will not be asked if they want a sales tax.

"They finally got it," James Garhart of Palmer said. "Personally, I want a sales tax, but not until voters can approve the tax-cap initiative. The voters have turned down the sales tax every time because it is just an addition to their property tax.

"I think if the tax cap passes, the people will approve a sales tax," Garhart continued. "Then the tax will be equitable for everyone."

Assembly members heard from angry taxpayers during public hearings in late June, but put off taking action on the sales tax proposal until they had time to examine the financial impact of two proposed amendments intended to make the tax more attractive to voters.

Promising tax relief for property owners, the assembly considered offering a 2-mill reduction in property taxes -- from 11 mills down to 9 mills.

Assembly Member Betty Vehrs drafted an amendment, which was approved in a narrow 4-3 vote, that would have established a 9-mill tax cap.

If the mill rate climbed past the cap, the sales tax would be terminated.

Another assembly member, Jody Simpson, offered an amendment adding words that promised sales tax revenue would be used to reduce property taxes, which was also approved.

Borough officials also reviewed projections about the impact a $20,000 property tax exemption -- similar to one instituted in Anchorage in April -- would have on the taxpayer and borough coffers, but dismissed the idea.

"I think we are making a mountain out of a molehill," Assembly Member Bill Allen said of the multiple amendments. "If we keep piling things on, the voters will be so frustrated they will just say no."

After all the debate and public input, assembly members Colver, Vehrs and Tallis Colberg joined Allen in a vote against placing the question on the ballot, giving the voters a rare break from the sales tax question.

The 2-percent sales tax was expected to generate, at minimum, $11 million in revenues, according to Mat-Su Borough Manager John Duffy.

Now without the tax, borough officials are seeking new revenue sources.

"I think we need to focus on developing the port, getting more anchor tenants, and other commercial development before we ask for a sales tax," Colver said.

"We just approved a position for an economic developer director in the last budget. Filling that position and get him working toward attracting new business to the borough is a priority," he added.

Contact Darrell Breese at 352-2267 or darrell.breese@frontiersman.com.