Assembly votes 6-1 to indefinitely postpone sales tax proposition

PALMER — On Tuesday, the Mat-Su Borough Assembly voted 6-1 to indefinitely postpone an ordinance that would put a 2 percent sales tax before borough voters.

The proposal came after the Mat-Su Borough School Board asked the assembly to consider letting voters decide on a sales tax to fund education. At Tuesday’s meeting, proponents of the tax, many of whom identified themselves as teachers, school administrators, or parents, warned of increasing class sizes in the wake of diminished state funding and flat funding in the borough budget.

Tim Walters, President of the Mat-Su Education Association warned, “This year we’ll see high school classes in the forties. You’ll hear stories of Kindergarten classes in the thirties.” His invitation to picture thirty kindergarteners with scissors elicited laughs from the packed house.

Houston High School Principal Bill Johnson told the assembly that decreased funding per student has impacts beyond the classroom as well. He said Houston’s football team, which finished second in the state last year, has lost ten players because, “Fees have gone up. The cost of being able to take place in activities has taken a toll.”

Johnson said the future outlook isn’t much better, with the district expected to run a $20 million deficit in the next two years.

While those who spoke in favor of the sales tax proposal spoke passionately, they were clearly outnumbered by those who were opposed. Some referred to any additional taxation as, “the tools of slavery,” or simply “theft.”

Many, including representatives of all three incorporated cities in the borough, cited the potential impact on small businesses. They said that, when combined with existing municipal taxes, a borough sales tax could reach the tipping point where people might choose to make more purchases in Anchorage. Jim Turner, owner of Turner’s Corner in Wasilla, said the tax would significantly eat into the profits of what is already a low-margin business. He added that it would be difficult to raise prices on fuel because he needs to remain competitive with prices in Anchorage. Turner warned that the biggest impact would not hit shareholders of large chain stores because, “It doesn’t matter if you buy from their Valley or Anchorage store.”

Some objections on Tuesday centered on the idea of designating the sales tax for education. Wasilla Mayor Bert Cottle reminded the assembly and audience that the Alaska State Constitution requires that area-wide taxes be placed in the general fund, which can be used for any discretionary spending, not just schools. While he said the City of Wasilla supports funding education, “The question is where does that money come from, how do we collect it, and who collects it?” Cottle said the Wasilla City Council was concerned that a borough sales tax would undermine the city’s ability to collect its own sales tax.

In addition to businesses, a few who spoke at Tuesday’s meeting stated that a sales tax would have a disproportionate impact on poorer residents of the Mat-Su. Todd Smoldon, who teaches in Anchorage but lives in Willow, cited the recent cuts to Permanent Fund Dividend checks and the impact that would already have on many in the borough. He said, “This will constitute a 10 to 20 percent reduction in income for the poorest members in our borough, and you—not all of you—but we are requesting a sales tax on those people?”

School performance and the high rate of per-pupil funding in Alaska were also major issues for some of those who spoke against the sales tax. According to the U.S. Census Bureau, Alaska has the second-highest rate of spending per student in the country at over $20,000. Mike Alexander, an opponent of the ordinance, doesn’t believe the investment is being spent well, given results. He said, “We’re buying an Escalade, we think, and we’re getting a Yugo, because our kids are testing horribly…If you’re top 10, top 20, I’d go hard out for you, but you’re not.”

Alaska does lag behind much of the country, both in terms of test scores and graduation rate. Jillian Morrissey, Public Information Officer for the school district, said using statewide numbers to talk specifically about the Mat-Su “isn’t apples to apples.”

She stated that the graduation rate in the borough has risen in recent years, and data from the Alaska Department of Education and Early Development bear that out. The borough is now ahead of the state average in terms of graduation rate, with 78.52 percent of students graduating high school. That still lags about five percentage points behind the national average, however.

After two hours of public testimony, the assembly took up its own discussion. For the sales tax to appear on this year’s October ballot, they would have to reach an agreement this week. The revised version of the ordinance, which lowered the tax rate from 3 percent to 2 percent called for a special election in January, which rubbed some in the audience and at least one on the dais the wrong way. Assembly Member George McKee said that changing from the regular election to one in the middle of winter could give the appearance of trying to manipulate the outcome.

Assembly Member Steve Colligan, who terms out on the assembly this year, said this decision was likely to be his last consequential one as part of the body. He said the discussion around the tax was likely to get ugly, and that it had the potential to pit children against taxpayers.

He then moved to postpone the ordinance indefinitely. That vote passed 6-1, but the discussion of sales tax or other revenue for schools is not over. The assembly instructed Borough Manager John Moosey to speak with the cities, the school district, and local businesses to see where there might be common ground. Moosey is expected to report back to the assembly in November.