Tax cap question heads to court

MAT-SU -- The Mat-Su Borough is in a dispute that, Monday, found its way to Anchorage Superior Court after an initial request by a group of Valley citizens to place the matter on the October municipal ballot was rejected.

About 100 people signed petitions asking the Mat-Su Borough to place on the October ballot a tax cap initiative, but that petition was recently denied. According to a June 14 letter from Mat-Su Borough Clerk Michelle McGehee, the tax cap initiative reached beyond what the borough had the power to enact.

"[It] could not be enforced as a matter of law, as it attempts to establish a different tax limitation as the one already mandated in the Alaska Statutes," McGehee wrote.

After receiving the denial, petition sponsors Penny Nixon and Dennis Oakland challenged the decision, this time in Anchorage Superior Court. According to their attorney in the case, Ken Jacobus, Anchorage was chosen because it was a more convenient venue for him to reach.

The challenge seeks to overturn McGehee's decision -- and in time for the October ballot. But borough attorneys aren't so sure a challenge will be successful. Mat-Su Borough Attorney Teresa Williams said she consulted McGehee when the petition for an initiative was submitted. Williams said state law provides a way to institute a tax cap, but the borough -- and, Williams said, borough voters -- do not have the power to make changes to state law.

"It's my recommendation … that it's the wrong forum," Williams said. "They should be at the state level. We're basically required to do exactly what the state says."

Ken Jacobus is acting as the attorney representing Valley residents Penny Nixon and Dennis Oakland in the complaint against the borough and McGehee, in her capacity as clerk. Jacobus, in recent years has become a familiar face in initiative-related cases. He went to court in 2003 on behalf of a group seeking to legalize the use and growth of marijuana, has worked with Alaskans for Efficient Government, a group that wanted to move the Alaska Legislature to the Mat-Su, and represented members of the Tax Cap Yes group, which, in 2000, backed a statewide tax cap measure.

In this case, Jacobus argues two primary points: That cities and municipalities have the right to enact a sales tax, and that Nixon and Oakland's petition should not have been rejected.

"The only way the clerk has the authority to reject something is if it is clearly unconstitutional or clearly unable to be enacted as a matter of law," Jacobus said.

In his complaint for injunctive relief, Jacobus wrote that other Alaska cities have enacted tax caps, therefore the petition is enforceable as a matter of law. Williams agreed that some other communities have enacted tax caps, but most of those, like Anchorage, are home-rule cities governed by their charter. While state law stipulates what non-home-rule cities may do, home-rule cities are allowed to exercise all powers (as adopted by their citizens) not prohibited by state law.

Jacobus said home-rule or non-home-rule cities aren't treated differently -- a non-home rule city should be afforded the same ability to enact a tax cap as a home-rule city. But he recognizes that the case may be a difficult one to solve.

"It's not a slam-dunk case," Jacobus said.

The Mat-Su Borough has not yet filed a response in the case, and must do so before July 12. Jacobus said he's hoping the case is handled quickly -- in order for it to appear on the October ballot, a decision must be reached by the second week of August.

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