Soldotna introduces ordinance to reinstate grocery tax

Soldotna residents will soon have the chance to weigh in on whether the city brings back its year-round grocery tax.

The Soldotna City Council introduced an ordinance at its Wednesday meeting that would amend city code to restore the year-round tax on nonprepared food items, also known as the grocery tax.

When it was a first-class city, Soldotna had to collect sales taxes in the same manner as the Kenai Peninsula Borough did. In 2008, the borough assembly passed an ordinance that allowed first-class cities to levy their own taxes, which allowed Soldotna to not participate in the nine-month grocery tax exemption. A group of citizens challenged the ordinance and were handed a favorable decision in 2014 from the Alaska Supreme Court, allowing them to gather signatures for a ballot initiative to repeal the 2008 ordinance.

When the ordinance passed in the October 2015 municipal election, Soldotna had to reapply the exemption and only collect the tax during summer months.

Members of the Soldotna Charter Commission that created the home-rule charter voters approved in the Oct. 4 election have said that Soldotna residents had overwhelmingly voted to keep the year-round grocery tax last year. They did, by a nearly 27 percent margin, according to the borough election results. Now that Soldotna is a home-rule
community, it has the option to opt out of the exemption on collecting the tax.

According to the proposed ordinance, the new section of code would read: “Except as provided in AS 29.45.700(D) which exempts food purchased under the Food Stamp Act or Special Supplemental Food Program for Women, Infants and Children, there shall be no sales tax exemption on non-prepared food as provided by Kenai Peninsula Borough Code…”

When the council was working on its fiscal year 2017 budget in June, City Manager Mark Dixson had proposed raising the city’s mill rate from 0.5 mills to 2.0 mills to make up for lost revenue from the lack of a year-round tax. At that time, he said that even quadrupling the mill rate wouldn’t get Soldotna completely out of the hole created in part by the loss of year-round sales tax revenue on nonprepared foods and by the loss of state funding.

Soldotna had been projected to lose $1.2 million in revenue in the wake of losing its year-round grocery tax, and Dixson said after a May budget work session that the city’s first-quarter payment came in $488,000 lower this year.

In the end, the city council voted in June to keep Soldotna’s mill rate the same and use its reserves to make up for the deficit, which would have still been $900,000 had the property taxes been raised to 2 mills.

Introduced on the council’s consent agenda, the ordinance to restore the sales tax will come up for public hearing at the council’s Oct. 26 meeting.

Reach Megan Pacer at megan.pacer@peninsulaclarion.com.

More in News

Council member James Baisden speaks in favor of an amendment to the City of Kenai’s budget that would add funds for construction of a veteran’s memorial column in the Kenai Cemetery during a meeting of the Kenai City Council in Kenai, Alaska, on Wednesday, June 5, 2024. (Jake Dye/Peninsula Clarion)
Kenai budget amendment allocates funds for veterans’ columbarium in cemetery expansion

A columbarium is an aboveground structure that houses cremated remains

Council member Alex Douthit speaks in favor of an amendment to the CIty of Kenai’s budget that would reduce funds allocated to the Storefront and Streetscape Improvement Program during a meeting of the Kenai City Council in Kenai, Alaska, on Wednesday, June 5, 2024. (Jake Dye/Peninsula Clarion)
Funding reduced for City of Kenai’s storefront improvement grant program

Just over a year after the City of Kenai established its Storefront… Continue reading

Mount Redoubt can be seen across Cook Inlet from North Kenai Beach on Thursday, July 2, 2022. (Erin Thompson/Peninsula Clarion file photo)
Hilcorp only bidder in Cook Inlet oil and gas lease sale

8 million acres were available for bidding in the sale, spread across Cook Inlet and the Alaska Peninsula region

Council member Phil Daniel speaks during a meeting of the Kenai City Council in Kenai, Alaska, on Wednesday, June 5, 2024. (Jake Dye/Peninsula Clarion)
City of Kenai approves budget

A draft of the document says that the city expects to bring in around $19.5 million in the next year, and spend $20.2 million

A sockeye salmon rests atop a cooler at the mouth of the Kasilof River on Monday, June 26, 2023, in Kasilof, Alaska. (Jake Dye/Peninsula Clarion)
A sockeye salmon rests atop a cooler at the mouth of the Kasilof River on Monday, June 26, 2023, in Kasilof, Alaska. (Jake Dye/Peninsula Clarion)
Kasilof River personal use setnet opening delayed

Low counts for Kenai River early-run king salmon motivate restriction

Ben Meyer, environmental scientist and water quality coordinator for the Kenai Watershed Forum, teaches children about young salmon freshly pulled from the Kenai River during the Kenai River Fair at Soldotna Creek Park in Soldotna, Alaska, on Saturday, June 7, 2024. (Jake Dye/Peninsula Clarion)
Kenai River Fair debuts with array of activities and education

Previously called the Kenai River Festival, the newly refocused fair featured booths and activities dedicated to education about the outdoors, wildlife and ecosystems

A sign welcomes visitors on July 7, 2021, in Seward, Alaska. (Photo by Jeff Helminiak/Peninsula Clarion)
Seward Pride Alliance rallies after bomb threat displaces drag story hour

The event was able to continue after a delay and a fundraising effort has brought in more than $13,000

Jake Dye/Peninsula Clarion
City of Kenai Public Works Director Scott Curtain; City of Kenai Mayor Brian Gabriel; Kenai Peninsula Borough Mayor Peter Micciche; Sen. Lisa Murkowski; Col. Jeffrey Palazzini; Elaina Spraker; Adam Trombley; and Kenai City Manager Terry Eubank cut the ribbon to celebrate the start of work on the Kenai River Bluff Stabilization Project on the bluff above the Kenai River in Kenai on Monday.
‘The future is bright for the City of Kenai’

Kenai celebrates start of bluff stabilization project after developing for 40 years

A Kenai Peninsula Food Bank truck in the Food Bank parking lot on Aug. 4, 2022 in Soldotna, Alaska (Jake Dye/Peninsula Clarion)
Kenai Peninsula Food Bank’s Spring Festival set for Friday

The event will feature a wide swath of vendors, including lots of nonprofits, who will be sharing information about their services

Most Read