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

Voters fill out their ballots at the Challenger Learning Center in Kenai, Alaska, on Election Day, Nov. 8, 2022. (Jake Dye/Peninsula Clarion)
Election 2023: When, where to vote Tuesday

City council, Kenai Peninsula Borough Assembly, the local school board races are all on the ballot

Dianne MacRae, Debbie Cary, Beverley Romanin and Kelley Cizek participate in a Kenai Peninsula Borough School District Board of Education candidate forum at Soldotna Public Library in Soldotna, Alaska, on Thursday, Sept. 28, 2023. (Jake Dye/Peninsula Clarion)
School board candidates wrap up forum series

The forum was the eighth in a series hosted by the Clarion and KDLL ahead of the 2023 elections

Signs direct visitors at the City of Seward’s city hall annex on Sunday, Nov. 28, 2021, in Seward, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Electric sale referendums to be reconsidered next month

The two referendums aim to remove from the city’s Oct. 3 ballot two propositions related to the sale of the city’s electric utility

Sockeye salmon caught in a set gillnet are dragged up onto the beach at a test site for selective harvest setnet gear in Kenai, Alaska, on Tuesday, July 25, 2023. (Jake Dye/Peninsula Clarion)
Board of Fish proposals center on king salmon, east side setnet fishery

Many proposals describe changes to the Kenai River Late-Run King Salmon Management Plan

Jake Dye/Peninsula Clarion
Senior Prom King and Queen Dennis Borbon and Lorraine Ashcraft are crowned at the 2023 High Roller Senior Prom at Aspen Creek Senior Living in Kenai, Alaska, on Friday, Sept. 22, 2023.
Senior prom crowns king and queen

In brainstorming options, the concept of putting on a prom turned some heads

A photo distributed by the Federal Bureau of Investigation shows a man who allegedly robbed the Global Credit Union branch located in Anchorage, Sept. 19, 2023. Tyler Ching, 34, was arrested last week on charges related to robberies at the credit union and an Anchorage bank. (Photo courtesy Federal Bureau of Investigation)
Alleged bank robber arrested in Cooper Landing

An Anchorage resident was arrested by the Federal Bureau of Investigation in… Continue reading

A seal rescued earlier this summer by the Alaska SeaLife Center awaits release on the North Kenai Beach in Kenai, Alaska, on Saturday, Sept. 23, 2023. (Jake Dye/Peninsula Clarion)
2nd harbor seal release draws large crowds

The seals were Pierogi, Pringle and Belle de Fontenay

Attendees search the waters of the Kenai River for sightings of Cook Inlet belugas during Belugas Count! at the Kenai Bluff Overlook in Kenai, Alaska on Saturday, Sept. 23, 2023. (Jake Dye/Peninsula Clarion)
Belugas Count! celebrated in Kenai

At a viewing station on Kenai’s bluff overlook, dozens gathered and peered out over the Kenai River during a morning session

Kenai Peninsula Borough School District Finance Director Elizabeth Hayes, left, gives a presentation on the school district’s FY23 budget at Soldotna High School on Thursday, Oct. 8, 2021, in Soldotna, Alaska. Hayes during the KPBSD Board of Education’s Sept. 11, 2023, meetings, debuted first of an informational “Budget 101 Series.” (Ashlyn O’Hara/Peninsula Clarion)
School district warns of looming $13 million deficit in first ‘Budget 101’ presentation

The first installment explored Alaska’s foundation formula

Most Read