-33°

Purchasing groceries will soon be a bit kinder to the checkbook following Tuesday's municipal election in which voters overwhelmingly approved Proposition 1, a measure eliminating borough sales taxes on non-prepared foods for nine months of the year.

The so-called food-tax holiday ballot measure promoted by James Price, a Nikiski resident and head of Alaskans for Grocery Tax Relief Now (AGTRN), earned better than 60 percent of the vote, winning by a margin of 5,711 to 3,724.

Though state law restricted the borough from actively campaigning against the proposition, Borough Mayor John Williams' administration warned that such a tax holiday would cut borough revenues by perhaps $1.7 million or more annually.

The borough's General Law cities of Homer, Soldotna and Seldovia, which by law can only tax items also taxed by the borough, also stand to lose significant portions of their revenue streams.

The state statute imposing that restriction, however, also allows them to impose taxes on products not taxed by the borough if granted the authority to do so by the borough assembly. All three municipalities have formally requested the authority.

The borough assembly approved the cities setting their own tax policies last month, but a reconsideration move put off a final decision until the Oct. 14 assembly meeting.

Soldotna and Seldovia have indicated they would consider ordinances applying their own taxes on food during the nine-month period. Homer, on the other hand, may go the other way. That city is considering its own tax holiday measure.

All three cities depend on tax revenue derived from spending by residents living outside their borders. It is not clear yet whether the loss of the sales tax revenue will lead to increased property taxes within those municipalities, but some residents have expressed such concerns.

The Home Rule cities of Kenai and Seward already have the authority to tax beyond what the borough taxes.

Regardless of the affect on the revenue streams of municipal governments, there were good arguments for establishing a tax holiday outside of the tourist season. Given the increasing costs of virtually everything, the vast majority of voters saw Proposition 1 as welcome tax relief in hard times.

The borough tax will be applied during June, July and August, the three months during which the population of the peninsula swells with visitors.

Efforts to reach Price for comment late Tuesday night were not successful.

Hal Spence can be reached at hspence@ptialaska.net.