Kenai Peninsula Borough voters considered two propositions on Tuesday’s ballot that appeared to be losing by wide margins by the time preliminary results filtered in Tuesday night.

Proposition 1 sought to change borough government to a manager-based system similar to that of the City of Homer and other municipalities.

Proposition 2 was more familiar to voters, with once again asking them if they wanted to raise the sales tax cap from $500 to $1,000.

In borough-wide results, and with 28 of 29 precincts counted, Prop 1 was failing by 4,115 to 3,132 votes or 56/78 to 43.22%

Prop 2 was failing with 3,985 to 3.317 votes, or 54.57 to 45.43%.

In the Homer area, both propositions did better, winning in Homer 1 and 2 precincts, Diamond Ridge, Fritz Creek/Kachemak City and Seldovia.

If Proposition 1 had passed, a mayor would still have been elected borough-wide, but the duties of that mayor would not include being the chief administrator of the borough. The elected mayor would serve as the chair of the assembly, participate in assembly discussions, vote on assembly actions in the case of a tie and still hold veto power. According to the Division of Community and Regional Affairs records, 12 of the 19 boroughs in Alaska have a manager form of government, as do several cities within the borough.

Assembly members Hal Smalley and Kelly Cooper sponsored the ordinance putting the question to the voters.

Cooper noted that the last time the borough asked voters to consider a manager-based system, it failed 73 to 27%.

“It did much better this time,” she said. “I think people are starting to understand the value of a professional manager system and its consistency. … I think our voters are becoming more engaged. They’re asking questions about how government works.”

Observing that the lower Kenai Peninsula south of Anchor Point voted for Prop 1, Cooper said, “I don’t know if they’re feeling that their voice isn’t being heard — it’s (government) not being responsive to the areas further out.

Under current Kenai Peninsula Borough code, sales tax is only applied up to the first $500 of a purchase. This cap has been in effect in the borough since 1965. According to the Alaska Department of Labor, $500 in 1965, adjusted for inflation on the Anchorage Consumer Price Index, would be worth about $3,195 in 2018.

The Borough’s sales tax of 3%, when applied to a purchase of $500 or more, adds an additional $15 to the cost of the purchase. Proposition 2 would have raised that cap to $1,000. If applied under the current tax rate, the maximum amount paid on any given purchase would have been $30. Residential rentals would have been exempt from the potential cap increase because “it would disproportionately affect tenants of residential property who would pay the higher rate every month,” according to the language of Proposition 2.

The Kenai Peninsula Borough Finance Department estimated the sales tax cap increase would have generated approximately $3.1 to $3.4 million annually in additional revenue. In the borough, sales tax revenues go directly to fund education.

Cooper said she was disappointed Prop 2 failed, “especially after all the angst that occurred with the negotiation of the school district contracts. We saw all those wonderful sings, ‘we support teachers,’ ‘we support our support staff.’”

Voters might not have realized raising the tax cap meant more revenue for the school district.

“I don’t understand why it didn’t pass,” Cooper said. “I don’t know if the message didn’t get out.”

Organized opposition to Proposition 1 came mainly from Alaska Yes, a nonprofit group that registered as an independent expenditure organization. In a complaint, Alaska Yes came under fire from the Alaska Public Offices Commission for failing to register as a group in a timely matter, failing to file campaign disclosure reports, failing to report non-monetary contributions to the John Quick campaign, using Alaska Yes expenditures to support Quick and failing to identify the true source of funds used in expenditures. Alaska Yes said about $20,000 in contributions came from Celebrate Alaska, an Aug. 31 fundraiser held in Homer. APOC said Celebrate Alaska is also a reserved name of Alaska Yes, and it should have identified its “true source of funds.”

On billboards, Alaska Yes argued against Prop 1 to “save your right to vote and then keep voting.” That argument resonated with voters. In interviews at peninsula precincts, most spoke against the idea.

“I voted no because we wouldn’t get a vote,” an anonymous voter said.

“I think it takes away the power of the people to decide who will be in charge,” added another anonymous voter.

“They want to bypass the will of the voters,” Wayne Walton of Nikiski said.

“I’ve seen it in other areas and I think this borough would be particularly susceptible to cronyism, so I’m against it,” Roger Long of Nikiski said on why he voted no.

“I don’t think that style of government would be a good fit for our borough,” said Seth Tauriainen of Nikiski.

But not everyone was opposed to the idea.

Soldotna resident Lyn Kennedy voted in support of the borough manager system of government. She said it would be a good idea for the borough.

“The local cities here all do it and we seem to survive just fine,” she said. “I think when you elect a mayor, you always have a learning curve for them no matter who it is. When somebody gets into office, it takes them awhile to get up to speed. They can’t really do everything as well as they should when that happens. I think when you have a manager, most likely your manager is going to stay a little bit longer and have more knowledge in that area. I just think it’d be a better move for the borough in the long term.”

On Proposition 2, Kennedy also voted to increase the sales tax cap.

“I think it’s long overdue,” she said. “We’ve got to get with the times here.”

Others agreed with Kennedy.

Kasilof resident MaryAnn Dyke believes in voting, she said, and that it’s everyone’s civic duty to be involved in the community and to vote. She supported Propositions 1 and 2.

“There’s more people involved in selecting the manager in our area,” Dyke said. “Also, I think we need more services and we need to pay for them, not just keep going into debt, going into debt, going into debt.”

“I didn’t even realize it was on the ballot, but I think it’s about three decades overdue,” said Peter Ribbens of Nikiski on why he voted yes.

“I think it makes economic sense due to inflation, and income is a big issue for the borough,” said Roger Long of Nikiski.

“As a younger voter I think the increase is overdue,” another anonymous voter said.

“I think everybody should be taxed, and the increase is reasonable if we want to do things like fix the roads out in Nikiski, which have always been bad,” an anonymous voter said.

Nancy Lee Evans of Diamond Ridge in Homer voted yes on raising the sales tax cap.

“We need to enhance and diversify the tax stream of income for the borough,” she said.

“Ditto,” added fellow Diamond Ridge resident Jenny Edwards. “I can’t believe how many times I’ve said to (Rep.) Sarah Vance, ‘Tax us.’”

But by the time votes were counted, the anti-tax sentiment prevailed.

“It’s only gonna punish the people making large purchases,” an anonymous voter said on voting no.

Kasilof resident Doug Johnson said he came out to the polls because he always votes. He said he voted against Proposition 2 because he doesn’t want to see any new taxes.

“I’m in the no tax crowd,” Johnson said.

Hannah Dolphin of Soldotna voted against the sales tax cap.

“I was afraid that if we up the cap on sales tax people will take business out of our community.”

Borough-wide voter turnout was 13.9%.

Reach Michael Armstrong at marmstrong@homernews.com. Peninsula Clarion reports Victoria Petersen and Brian Mazurek contributed to this article.