Alaska Supreme Court reverses food-tax referendum decision

In a decision that clarifies the rights of Alaska citizens to change law by initiative and referendum, the Alaska Supreme Court on Friday said the Kenai Superior Court and the Kenai Peninsula Borough Clerk erred when they rejected a 2010 proposed referendum by James Price, a Nikiski citizen activist. Price sought to repeal a 2008 Borough Assembly ordinance that allowed the borough’s general law cities of Homer, Soldotna and Seldovia to continue charging a year-round sales tax on nonprepared food items. The Supreme Court decision in Price v. Kenai Peninsula Borough et al. reverses a summary judgment by the Superior Court that said Price’s proposed referendum could not proceed because it constituted “local or special legislation” in violation of state law.

“I’m very excited about the possibility to be able finally to allow the people to have their say in this issue,” Price said in reaction to the ruling. “It’s lawfully appropriate for the people to make this decision. It’s unfortunate they were not allowed to make that decision in 2010.”

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 to grant it the option to tax nonprepared food. Ordinance 2008-28 was passed 6-1 by the borough in September before voters later approved a referendum requiring that nonprepared food taxes be exempt from sales taxes from Sept. 1 to May 31. Soldotna later used that power granted to it by the borough to make sales taxes on food year round. Homer put the 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 it does not levy sales taxes.

The borough has 10 days to decide how it wants to proceed, said Borough Clerk Jonni Blankenship, and borough attorneys are reviewing the Supreme Court decision to decide what action to take.

In a decision written by Justice Craig Stowers, the Alaska Supreme Court not only considered the borough’s argument that the ordinance could not be changed by referendum because it was local or special legislation, but that it was unenforceable as a matter of law.

The borough argued and the Superior Court agreed that while the referendum would be voted upon by all borough residents, it would only affect Homer, Seldovia and Soldotna, and thus be local or special legislation. The court said it would first determine if such legislation is generally applicable. It said because the ordinance was passed by an assembly representing the entire borough — that is, some of whose members do not represent Homer, Seldovia and Soldotna — the same factors are relevant in considering if the referendum or ordinance is local or special legislation.

“We conclude that the ordinance is more akin to legislation that we have previously held to be generally applicable,” Stowers wrote.

He cited challenges to ballot initiatives that would have moved the state capital, Boucher v. Engstrom, and one that would have regulated large-scale mining, Pebble Partnership v. Parnell. In both cases the court found that both “initiatives were generally applicable although the effects of the initiatives would likely not be uniform statewide,” Stowers wrote.

In reference to Ordinance 2008-28, “borough residents who do not live in the general law cities have an interest … because they may shop and use other services in the general law cities.”

Ordinance 2008-28 is of borough wide interest and does not violate the state’s prohibition on local or special legislation, the Supreme Court concluded.

The Superior Court decision did not consider the argument that the referendum was unenforceable, and Price did not consider it on appeal, but the Supreme Court went ahead and ruled on that point as well. The borough had argued that the power to authorize taxation is exclusive to the assembly and that a referendum would unlawfully delegate such power to the voters.

“We conclude that the referendum would be enforceable,” Stowers wrote for the court.

The issue isn’t if a referendum authorizes cities to tax different sources than the borough, as the borough argued, but if it can repeal an authorization made by the assembly. State law doesn’t prohibit repealing by referendum an ordinance authorizing city taxation, Stowers wrote.

“The borough’s position, if adopted here, would impermissibly limit the referendum power,” Stowers wrote. “The Alaska Constitution expressly empowers voters to nullify the exercise of legislative power by rejecting legislative acts.”

Ballot Measure 1, a measure that would repeal Senate Bill 21 changing Alaska’s oil tax structure, is an example of asking voters to repeal legislative acts.

Price praised the Supreme Court for making the right of voters to reject legislation clear.

“They (the borough) should not try to stop the people from having their say in their government,” he said. “It’s our government. It belongs to the people.”

Price also said he was disappointed it took so long for the courts to rule. Acting on his own, or pro se, he appealed to the Superior Court the borough’s denial or his referendum. Attorney Joseph Skrha then helped him fund an appeal to the Alaska Supreme Court, and Anchorage lawyer Kenneth Jacobus presented the appeal.

“It’s frustrating when it takes years and thousands of dollars to force the borough to get your rights you’re granted through Alaska Statutes and the Constitution of the State of Alaska,” Price said.

Michael Armstrong is a reporter with the Homer News. He can be reached at michael.armstrong@homernews.com.

More in News

Sockeye salmon. (Photo via Alaska Department of Fish and Game)
Fish and Game seeks comment on 2022 sport fish stocking plan

The Sport Fish Division plans to release approximately 7 million fish into the Alaska water systems over the next five years.

A map shows which parts of the Chugach National Forest are open to motorized winter recreation use for the 2021-2022 season. (Map courtesy of the U.S. Forest Service)
Parts of Chugach National Forest open to snowmachine use

The 2021-2022 winter motorized season will run through April 30.

Kenai Police Department Chief David Ross explains the purpose of a grant to be used for new radios during a meeting of the Kenai City Council on Wednesday, Dec. 1, 2021 in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Kenai Police to update radios using grant money

The department received almost $260,000 through the U.S. Department of Homeland Security.

Democratic Party candidate for governor Les Gara attends a Zoom meeting with Homer residents on Nov. 18, 2021, from his Anchorage, Alaska, home. (Screen capture)
Gara makes election pitch to Homer

Democratic Party candidate for governor Gara visits virtually.

A man missing for more than 40 years was identified by the Alaska Bureau of Investigation as a Chugiak resident who was last seen in 1979. The man’s body was discovered on an island near Anchorage in 1989. (Courtesy photo/Alaska Department of Public Safety)
Body found in 1980s ID’d through DNA analysis

The body, found in 1989, had been unidentified until now.

COVID-19. (Image courtesy CDC)
COVID continues decline; 1 new death

The state had an estimated rolling average of 253.3 cases per 100,000 people over the past seven days.

U.S. Census Bureau Director Steven Dillingham addresses state and Alaska Native leaders Friday, Jan. 17, 2020, in Anchorage, Alaska. Dillingham will travel to Toksook Bay, on an island just off Alaska’s western coast, for the first count on Tuesday, Jan. 21, 2020. (AP Photo/Mark Thiessen)
Census reports minimal state population growth

The Kenai Peninsula Borough’s population grew by about 3,400 people between the 2010 and 2020 census.

The old Homer intermediate school building, showing the Homer Boys & Girls Club and gym on the south side of the building at the corner of the Sterling Highway and Pioneer Avenue.
The old Homer intermediate school building on the corner of the Sterling Highway and Pioneer Avenue, as seen in October 2010. It’s now known as the Homer Educational and Recreational Complex, or HERC. (Homer News file photo)
Homer awards contract to study use of rec complex site

The goal is to help the city understand the maximum use of that property.

Genna Stormer gives Santa a hug during Christmas Comes to Nikiski at the Nikiski Community Recreation Center on Dec. 14, 2019. (Photo by Brian Mazurek/Peninsula Clarion)
December brings the holiday cheer

Groups across the peninsula get into the spirit of the season with public events.

Most Read