Borough assembly delays vote on new motor fuel tax until Aug. 5

The Matanuska Borough Assembly kicked off what will be a lively debate over a proposed new 7 cents-per-gallon motor gasoline tax in the borough. The assembly’s vote on Ordinance 0R-25-076 was put off in the Tuesday July 15 meeting until the assembly’s August 5 meeting but local residents vented over the plan at the public hearing held for ordinance.

Most of the criticism centered on the financial effect the added costs for gasoline would have on low-and-middle income families and on senior citizens and disabled residents on fixed incomes.

Mat-Su residents spend a lot of time driving, particularly those who commute to Anchorage for work. “I spend $125 a week on gas just to go to work and to church on Sunday,” one resident told the assembly. “The added 7 cents per gallon just raises those costs higher.

The borough is already raising local property taxes indirectly by raising assessments of value on property, said another resident. The gasoline tax is just another increase. “Citizens need a break,” he said.

At the opening of the hearing borough manager Mike Brown explained a tough financial situation Mat-Su will face as its population continues to increase bringing a need for more infrastructure like roads and schools.

Local residents have been very supportive of both and approved taking on new road and school debt by wide margins in recent bond sale elections. The problem is that this debt is now paid for by property taxpayers and unless the borough diversifies its source of revenues to pay for new roads or schools Mat-Su residents will face a tough choice in few years.

The state is now unable to help municipalities pay for roads and school so any new facilities will by totally paid for by local residents.

If new roads or new schools are approved and paid for from property taxes the debt service on bonds could amount to a third of Mat-Su’s current tax revenue, Brown warned. “To me, this seems crippling,” he said.

“If we decide to build no new roads and schools the situation won’t get any worse, but we’d see no infrastructure improvements,” Brown told the assembly. A motor fuel tax is not the only option and there’s no near-term crisis loomings but it’s important to get the problem on the table for discussion, he said.

A motor fuel tax would also bring in new revenues partly paid by visitors driving to and through the borough, while the property tax is paid mostly by local residents and businesses. Also, Anchorage has a motor fuel tax of 10 cents a gallon which provides revenue to support social services.

Two amendments to the proposed ordinance are already pending and will be discussed Aug. 5. One would have a “sunset” provision so the tax would end unless the assembly extends it. Another amendment would exempt heavy equipment working off the road system from the fuel tax. Aviation and marine fuel are already exempt under the plan.

There will be variations of both amendments discussed. One idea floated at the July 15 meeting was to have the tax in effect for just one or two years to test it and see how much revenue it would generate. Borough officials have only estimates of the revenue.