A petition that aims to rescind a Kenai Peninsula Borough grocery tax ordinance has been certified and will be put on the October 2015 ballot.
Proposition 1 seeks to repeal a 2008 borough ordinance that authorized general law cities in the borough to collect 3 percent sales taxes on non-prepared foods during the wintertime. Volunteers for the referendum gathered 1,800 signatures, more than the 1,600 needed, and the borough clerk’s office certified the petition Friday. The proposition will be placed before the voters in the Oct. 6, 2015, regular borough election.
Nikiski resident James Price, one of the drivers behind the petition, started his efforts to remove the winter sales tax on non-prepared foods more than seven years ago. The referendum is a response to action the borough assembly took with an ordinance in 2008, which Price says “circumvented” a 2008 citizens’ initiative to end sales tax on certain groceries between September 1 and May 31.
While the 2008 grocery tax initiative passed with 60 percent of the vote, the ordinance that passed three weeks prior to the election granted the borough authority that allowed general law cities like Soldotna, Homer and Seldovia to levy a sales tax.
Kenai and Seward are home-rule cities and allowed by state law to levy and collect sales taxes. Under Alaska Statutes, general law cities may only levy and collect sales taxes “in the manner provided for boroughs,” unless the borough assembly authorizes general law cities to do so. The cities of Soldotna, Homer and Seldovia had requested the borough grant them the option to tax nonprepared food.
The borough does not collect sales tax on groceries in the winter, but large grocery stores like Walmart, Fred Meyer and Safeway reside in incorporated cities, which collect their own sales tax. The 2008 referendum only took away half of the grocery tax because of the borough’s action, Price said. His goal is to eliminate all winter grocery tax to ease the burden of high food costs to families.
“(The tax) is proportionately harder for families and people on a fixed income,” he said. “It’s not the best way to fund their municipalities. There are better ways to get taxes.”
The Soldotna City Council adopted a resolution in 2008 that requested the borough grant them the option to tax non-prepared food. Seldovia adopted a similar resolution.
Homer put a vote on the seasonal sales tax exemption to the people, and they chose to keep the seasonal sales tax exemption. Kachemak City near Homer also is a general law city, but does not levy sales taxes.
Price said volunteers in the southern Kenai Peninsula collected about half of the signatures thanks to the efforts of Tara Kain of Anchor Point, a co-sponsor for Alaskans for Grocery Tax Relief Now.
Home rule cities like Kenai and Seward are not affected by the proposition and both charge winter sales tax on non-prepared food. Price said he plans to organize a similar petition in Kenai this spring in time for its October election.
The city of Soldotna is considering home rule and has scheduled a special election for Feb. 3, 2015, to establish a charter commission. Homer voters in October rejected home rule.
Price said he is frustrated that Soldotna has attempted to become a home rule city, which could impact the referendum.
“We oppose that action as another series of events perpetrated by the government,” Price said. “Our focus will be to persuade people against home rule. Our hope is to make it clear what they are voting for is continued grocery tax.”
Borough Finance Director Craig Chapman said grocery tax from Soldotna makes up a significant portion of the borough sales tax, but he didn’t have numbers readily available. Chapman said the total impact of non-prepared food borough wide for fiscal year 2014 was $3.3 million.
According to the borough sales tax website, sales tax is budgeted at $30.5 million with a quarter of the revenue generated through tourism. Proceeds from the 3 percent consumer’s sales tax levied by the borough on all retail sales are dedicated to Kenai Peninsula Borough schools.
The route taken to get the proposition on the ballot was challenging, Price said.
The borough clerk’s office denied an application for a referendum to overrule the ordinance in 2010. Price and supporters of the Alaskans for Grocery Tax Relief Now took the borough to court. The Kenai Superior Court ruled in favor of the borough, which concluded that Price’s referendum was “unenforceable as a matter of law.”
Price appealed the decision to the Supreme Court of Alaska. The Supreme Court reversed the Superior Court in August.
According to the Supreme Court document, “because the referendum does not conflict with or exceed the scope of the power granted to the borough assembly to authorize general law cities to collect certain taxes, we conclude that referendum would not be unenforceable as a matter of law.”
Price said he is pleased with the Supreme Court decision and grateful for the opportunity to continue to challenge the borough.
Price is no stranger to leading citizen propositions. In 2013, voters passed a proposition for property tax relief that raised the allowable property tax exemption from $20,000 to $50,000. Price and Fred Sturman also were behind a referendum for borough assembly term limits.
“The government refuses to take ‘no’ for an answer and stack up obstacles, but I’m still here,” he said. “The assembly has the power to pass initiatives and restore what they took away from us. I have found it is futile to constantly ask a political body to change their mind. … Rules of survival in politics are to avoid controversy.”
Assembly Vice President Sue McClure of Seward said she hasn’t heard any other assembly members discuss the grocery tax proposition and couldn’t comment if the assembly would address the topic in the near future.
Assembly President Dale Bagley, who represents Soldotna, couldn’t be reached for comment Monday.
Price said the assembly process is one of the best in the country because of past ballot initiatives brought forth by the people, which makes for better government. What doesn’t work is when the assembly ignores what their constituents’ desire, he said.
“The fact that residents voted for tax relief in 2008 shows the will of the people,” Price said. “I feel comfortable we will do well in the election.”
Reach Dan Balmer at email@example.com.