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The Kenai Peninsula Borough clerk on Wednesday rejected an application for an initiative petition by the Alliance of Concerned Taxpayers to cap borough revenues. Clerk Johni Blankenship accepted a second ACT initiative petition to extend the current law on assembly term limits.

ACT is reviewing the split decision and considering whether to go ahead with the term-limit initiative signature drive or to try and get a favorable decision in Superior Court on the revenue cap initiative and collect signatures on both petitions at once.

"It is just more efficient for us to collect signatures on two petitions," said Mike McBride, an ACT spokesperson.

Under borough code, the clerk issues petition booklets. ACT could not try to collect signatures on the revenue cap petition with hopes that it would prevail in court.

To get an initiative on the Oct. 6 ballot, ACT would have to collect and file 1,736 signatures by July 28. The term limit petitions will be ready July 1.

McBride said ACT felt it had resolved issues regarding specific language in the revenue cap initiative after talking with KPB Mayor Dave Carey and his staff.

"I thought we had resolved all those issues, but apparently something got missed," McBride said.

"I was surprised," said Assembly President Milli Martin, Diamond Ridge. "I thought they had something that would pass muster."

Written in collaboration with borough attorney Colette Thompson, the clerk's letter asserts that authority to set the levy for property taxes lies solely with the borough assembly. Because the initiative requires voter approval to increase the revenue cap, where the source of revenues is either sales or property taxes, the initiative limits the tax rate of both taxes. Blankenship also cited some internal contradictions in language of the initiative petition.

In reading the clerk's letter and the ACT initiative, Martin said she now realizes it tries to control both sales taxes and property taxes.

"The sales tax in my book would be separate," she said.

Raising sales taxes requires voter approval. The borough already sets a cap on property taxes of 8 mills, Martin noted.

The initiative's intent is not to set the property tax rate, McBride said.

"Our intention is to limit the total revenue collected," he said.

McBride said ACT believes its initiative is legally defensible. It's basically the same as tax revenue caps in Anchorage, Fairbanks and the Matanuska-Susitna Borough, he said.

"For some reason it seems to be legal every place else, but it's not legal here," McBride said. "I'm confident that we will win, just like in the Mat-Su and the other municipalities around the state," he added.

As for the term limit initiative, Martin said she had talked to the borough attorney and was ready to introduce an ordinance preserving term limits, but under a different formula. A term limit passed by voters in 2008 under an initiative by ACT limits borough assembly members to two consecutive terms, making no distinction between a full three-year term or a term shortened for another reason, such as when an assembly member is elected to fill the remaining term when an assembly member resigns.

Martin's idea would limit assembly members to three, three-year terms or nine years total. Martin said she didn't introduce the ordinance so as to not cause confusion with the ACT initiative.

The assembly cannot change the 2008 term-limit law until October 2010. McBride said it can be argued that because of a 2009 court decision the law can't be changed until 2011. Trying to get another term-limit initiative on the ballot in October takes care of that confusion.

"The most practical way was to do another initiative," he said.

A copy of the clerk's letter rejecting ACT's initiative is available on ACT's Web site at www.act-kpb.org.

Michael Armstrong can be reached at michael.armstrong@homernews.com.