Sales tax hits agenda

Assembly member to unveil plan

May 11, 2007

By Russell Stigall/Frontiersman

MAT-SU - Is it time for a sales tax in the Mat-Su Borough?

Bill Allen, borough assembly member, said he thinks the rising cost of property tax in the Valley begs for relief from a tax on everything from tuna fish to teeth cleaning to Toyota Tundras.

Allen, who ran for office on a promise to reduce property tax, said his tax proposal is still in progress and he will continue to work with borough administration until he presents it to the borough assembly Tuesday night.

&#8220We'll have something the voters will appreciate and will ease the pain on the property-tax payers,” Allen said.

Adding a sales tax to the borough's revenue toolbox is a diversity issue, he said.

&#8220Right now borough has a single source of revenue, property tax,” Allen said.

This single source to fund road construction, borough workers, schools, libraries puts a pinch on homeowners, Allen said, adding that it's a problem getting worse with real-estate values on the rise, even though there's a borough tax cap.

&#8220Folks on fixed incomes are particularly hammered,” Allen said.

Allen said his tax could see some opposition as it makes its way through the assembly process and eventually to a boroughwide ballot.

&#8220People don't like to pay taxes. But they like the services,” Allen said.

Several times in the past Valley voters have turned their thumbs down at borough-proposed sales tax schemes.

Voters can choose whether they want to shift some of the property tax burden to a sales tax, Allen said. However, he said, voters must know there are consequences should they vote down the tax.

The borough will amend and approve its 2008 budget soon. The budget calls for reductions in funding for both schools and libraries in the Valley.

If Allen's tax proposal makes it to voters in October, the ballot may ask if a percentage of the tax should go directly to Valley schools and libraries, Allen said.

&#8220Particularly the libraries in Wasilla and Palmer,” he said.

The proceeds will go into the borough's general fund and be dispersed from there in grant form.

&#8220I don't think [taxpayers] will mind paying more taxes, but they want to know where it is going,” Allen said.

The draft version of Allen's tax will have special considerations for the cities of Houston, Palmer and Wasilla, areas that already levy a sales tax. Allen said his plan is for shoppers to pay one tax throughout the borough. Cities will retain their existing sales tax and pass the rest to the borough.

&#8220If [shoppers] buy something in Palmer they will pay the same as in Big Lake, except in Big Lake the borough keeps it all,” Allen said.

Allen said he believes there is support in the assembly for a sales tax. The sales tax ordinance would require approval from the assembly, public comment and finally a ballot vote as early as October. Property owners could see relief in the beginning of 2008.

Allen said a sales tax would make visitors to the Valley pay for the infrastructure they use.

&#8220That is an income we have not seen before,” Allen said.

The new tax package must save the average taxpayer money, Allen said.

&#8220We don't want anyone paying any more than they do now. Otherwise there is no reason to do it,” Allen said.

Susan Forwood, employee of Tanner's Trading Post in Talkeetna, speaking for herself, said the expense of living in Talkeetna would make a boroughwide tax prohibitive.

Up here we have milk at $4 a half gallon $4.35 per pound of ground beef. And wages are very low. It's almost to the point were you can't live.

&#8220I'm totally against any sales tax,” Forwood said.

Assembly member Cindy Bettine said she understands the financial difficulty of living in rural Alaska.

&#8220It is the cost of living in the more remote areas, food and gas and things like that do cost more,” Bettine said.

But she said that all Valley residents need to support borough infrastructure. Per capita the borough spends more on things like schools in outlying areas.

&#8220These need to be paid for,” Bettine said.

Bettine said that the purpose of the sales tax is to lower property tax.

&#8220And the only way to do that is to diversify how we do taxes,” Bettine said. &#8220The challenge for the assembly is come up with a sales tax ordinance that guarantees a reduction in property taxes.”

Though the borough passed a property tax cap in 2005, tied to the consumer price index, the average homeowner still pays dearly, Bettine said.

The average Valley home is worth $233,000, costing owners $255 in taxes per month, Bettine said.

&#8220And I think that is too much,” Bettine said.

Several voters requested a sales tax during testimony at recent borough budget meetings, Bettine said. She said she expects this type of public opinion will motivate the assembly to act.