The Kenai Peninsula Borough Clerk has rejected an initiative petition filed earlier this month by the Alliance of Concerned Taxpayers that sought to limit the total taxes the borough could collect from all sources in any one year.
Assigned the number 2007-07 by the clerk, the ACT initiative proposed an ordinance would limit any increase over the previous year's tax sum through use of a complex formula based in part on the consumer price index for Anchorage and a host of other factors.
After a review of the proposed ordinance, Borough Clerk Sherry Biggs rejected the initiative petition because it contradicted a state statute setting out the exclusive method of assessing, levying and collecting tax revenues.
"Additionally, the proposed initiative is so confusing as to be unenforceable as a matter of law," she said.
The proposed initiative set out a multi-stage method for computing the maximum allowable tax revenues for the upcoming year that included as factors tax revenues from all sources in the current year minus a list of deductions made prior to the cost of living adjustment defined in borough code.
Other factors included the consumer price index for all urban consumers in Anchorage, and a set of exclusions to which the tax cap would not apply, including appropriations from bond funds, taxes required to fund services authorized by ballot issues, funding for legal judgments against the borough, and emergency appropriations ensuring health and safety.
More than a page of definitions followed.
ACT also proposed that all borough programs or projects placed on the ballot soliciting voter approval include an estimate of operation and maintenance costs for the first full year of operation.
In a lengthy memo explaining the reasons for rejecting the initiative, Biggs noted that its provisions would be "extremely difficult to interpret and administer" as it was written, and that it appeared that administering it would require new rules and regulations, "which leaves much to interpretation."
Biggs listed three reasons the proposed ordinance would be unenforceable as a matter of law.
She said first that the proposal directly contradicted AS 29.45 governing municipal taxation, which provides no authority for the limitation proposed in ACT application.
"Where boroughs have attempted to assess, levy, or collect a real or personal property tax in a manner other than set forth in AS 29.45, the Alaska Supreme Court has rejected those efforts," she said. "The voters cannot do by initiative what the assembly cannot do by ordinance."
In addition, the initiative would bind the ability of future assemblies to establish the mill levy, she said, which violates the proposition that the municipal assembly may not bind itself to future legislative action. Furthermore, AS 29.45 uses mandatory language, meaning taxes must be assessed, levied and collected under the provisions of the state law.
Second, Biggs said the proposal was so confusing as to be impossible to implement.
Referring specifically to a legal requirement that initiative proposals be "comprehensive and concrete" enough to enforce, Biggs had Borough Attorney Colette Thompson and Borough Finance Director Craig Chapman review the initiative's proposed provisions.
"It became abundantly clear ... that the proposed initiative is so convoluted, complicated, and internally contradictory that the borough simply could not enforce it," Biggs said.
Third, certain provisions of the formula for a tax limitation contradict each other or were otherwise unenforceable, she said.
Biggs also pointed out that a provision requiring that the tax formula be applied by May 31 of each fiscal year would exclude substantial revenues form the June fishing season.
"By excluding these revenues, the formula is necessarily inaccurate," she said, adding that other aspects of the formula could be equally flawed, but the proposal was "so unintelligible" as to make impossible a clear determination of its intended meaning.
Biggs is required by law to draft an objective, complete and accurate summary of the proposal for petition purposes.
"This cannot be done where the intent is impossible to decipher," she said.
A phone call to Mike McBride, sponsor of the initiative petition, was not immediately returned.
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