Boroughwide sales tax to get another hearing

MAT-SU -- The Mat-Su Borough Assembly, Tuesday, decided it needs more time to consider and weigh public sentiment about the proposed 1-percent sales tax before placing it on the October municipal ballot.

The assembly chambers weren't packed with people at the public hearing, but there were plenty of ideas and opinions for the assembly to grapple with before placing the proposed taxes on the ballot -- if they get that far.

Local realtors testified that a severance tax on gravel -- also up for discussion at the special meeting -- would make the cost of building a home go up, and slow the Valley's booming real estate market. Two realtors indicated they may support the proposed 1-percent sales tax -- if it's linked to a cap on property taxes.

"I'm totally against a land tax … I'd be for a sales tax, if it would mean a reduction in the land tax," Don Zimmerman said. "If you guys could figure out how to reduce land taxes while raising sales taxes, it may get some more support."

The sales tax would be levied on all but federally exempted items, such as prescription medicine and items purchased with food stamps or assistance, with a maximum of $5 collected in tax on any item of $500 or more.

Two Wasilla city council members testified, also saying they'd like to see the sales tax linked to a property tax cap.

"When we passed the sales tax at the city of Wasilla, we capped our mill rate at the same time," said Wasilla City Council Member Noel Lowe. "And if the mill rate ever increases above 2 percent, the sales tax is abolished."

A few people told the assembly they were opposed to any sort of taxes -- that the borough government has no authority to tax them -- while another resident said he'd prefer to see the existing property taxes taken away and changed so people who weren't able to pay their taxes weren't penalized by potentially losing their home.

"I can't in good conscience support a tax that will take away the rights of these [people]," said Joseph Hawkins. Hawkins said he'd support a sales tax on nonessential items, or a "fat tax" on junk-food items such as soda, chips and candy. "How many people, in good conscience, can say 'I need my Snickers and I'm not willing to pay you two cents for it?'"

Business owners testified, airing concerns that they may have difficulties setting up their cash registers to properly account for taxed items, and that small businesses would be particularly damaged from the stress of adding a list of new duties to businesses with few employees.

Several residents testified against the tax, saying that the borough appeared bent on raising taxes and, although promising to diversify revenue, didn't appear to have any intent to reduce taxes in other areas once new taxes were in place.

"What we're talking about is nothing, pure and simple, but a tax increase," said Link Fannon. "I'm in absolute opposition of a boroughwide 1-percent sales tax."

"Try other means, like the proverbial coal-bed methane and other economic development," instructed Annette Harpster.

One resident, Anne Kilkenny, said she supported a sales tax, after hearing residents concerned about losing their property due to increasing property taxes.

"I sat through many of the [budget] public hearings and recognized that there are a lot of people for whom property tax increases have really gotten to be a problem," Kilkenny said. "I do believe a sales tax does broaden the tax base, and creates an opportunity for tourists to pay -- and also makes taxpayers out of teen-agers and kids. It broadens our tax base."

Kilkenny encouraged the assembly not to draw too much of a parallel between the city of Wasilla's sales tax and corresponding reduction in property taxes, noting that while the city's residents number about 6,500, they collect sales tax revenues from around 40,000 people who regularly shop there.

After listening to testifiers, assembly members said they wanted to see more work done on the ordinance before letting it go to voters. Assembly Member Bill Allen suggested staff from the borough talk about the ordinance with retailers to find out how it can be smoothly implemented if it's approved by voters. He also asked Borough Manager John Duffy to discuss issues with exemptions and ways to smooth the collection process with staff from the city of Wasilla -- things both Lowe and Wasilla City Council Member Verdie Bowen brought up when they testified.

Assembly Member Jody Simpson chided the administration for bringing what she said was a flawed document forward without going through the review processes Allen mentioned.

"Why do we do this?" Simpson asked. "It seems like we're doing this continually these days."

Borough Mayor Tim Anderson said he had asked that the ordinance be opened up to the public early on, to allow greater participation in the review process.

"This is kind of the discussion we had when setting the public hearing -- to have a public hearing early enough so we could work with the cities and to allow this time for people to consider and mull it around, and come up with ideas and amendments," Anderson said.

Assembly Member Talis Colberg said he was concerned the revised ordinance could be very different from the one assembly members were being directed to consider. Duffy said he didn't envision the revised ordinance being significantly different than the ordinance now before the assembly.

The assembly agreed to hold another public hearing on the sales tax ordinance on July 27, with the intent of making amendments and deciding whether the ordinance should go forward to voters at that meeting.

Contact Rindi White at rindi.white@frontiersman.com.