Borough assembly approves public hearing for sales tax to support schools

PALMER — After discussions between Mat-Su Borough School District (MSBSD) and borough assemblymen, it will most likely be up to borough residents to decide the fate of school district funding. At Tuesday evening’s regular assembly meeting, the body approved conducting a public hearing for putting a proposed three percent, borough-wide sales tax before the public.

The MSBSD is facing an approximate $11 million shortfall in its 2017-2018 school-year budget. A combination of flat education funding from Juneau for the upcoming school year, and the borough’s denial of a requested 1.5 percent funding contribution increase led the district’s board to ask for public help.

Tuesday evening, the borough assembly introduced Ordinance 17-093, “3 Percent Areawide Sales Tax to Support Education”. If approved, the ordinance would levy a three percent tax on sales, services, and rentals within the Matanuska-Susitna Borough. The main ordinance also included two additional stipulations. The first, 17-94, would allow the borough to collect the tax while 17-95 would cap the borough’s local contribution.

Although the ordinance’s introduction stipulated a three-percent tax, the borough’s finance director was directed to provide revenue projections at half-percent incremental steps lower down to 1.5 percent. Borough Mayor Vern Halter noted the assembly can amend the rate at its discretion. The MSBSD board may recommend a preference for the assembly’s consideration.

Borough documentation states the sales tax largely mirrors the two-percent tax levied by the City of Wasilla. The proposal would also limit the tax to the first $1,000 of a sale which would cap the amount at $30 regardless of the final sale price. The City of Palmer has the same $1,000 cap while Wasilla’s taxable sales limit sits at $500.

The proposed ordinance would also invoke a major change in how the borough helps fund local education by capping its local contribution at $50 million. Current revenues are generated mainly through a complex formula of property taxes as well as several other smaller sources. Halter noted that the borough chipped in more than $57 million last year.

Action taken Tuesday sets the ordinances for a public hearing at the assembly’s regular Aug. 1 meeting. If approved, the question would be put before Mat-Su voters at the Oct. 3, 2017 regular borough assembly election and take starting Jan. 1, 2018.