When voters go to the polls for Tuesday’s municipal election, they will be asked to decide on up to four borough ballot measures.
Proposition No. 1 asks voters to approve up to $10.6 million in bonds to cover the costs of constructing additional cells at the Central Peninsula Landfill. It is a forward-looking proposition as the current cells are expected to be full by 2019. All borough voters will be asked to weigh in on the proposition.
Proposition No. 2 asks voters in the South Peninsula Hospital Service Area to approve up to $4.8 million in bonds for design, construction and equipping of facilities at South Peninsula Hospital and Homer Medical Center.
Much of the discussion on the central Kenai Peninsula has centered on Propositions 3 and 4, both of which are part of Borough Mayor Mike Navarre’s comprehensive review of the borough’s tax code. A number of other changes to the tax code have been approved by the borough assembly; the measures included in the two propositions require approval from peninsula voters.
Proposition No. 3 would enact an ordinance to raise the maximum amount of a sale subject to tax to $1,000. Currently, borough sales tax is collected on the first $500 of a transaction. The measure would exempt residential rentals from sales tax.
Proposition No. 4 would enact an ordinance to gradually phase out the borough’s portion of the property tax exemption borough senior citizens receive. Currently, senior residents are eligible for a $150,000 exemption mandated by the state as well as a borough senior exemption of $150,000, and a borough resident exemption of $50,000, for a total of $350,000 in exemptions. Beginning in 2018, the borough’s senior exemption would be reduced over the course of six years, at borough residents who turn 65 after Jan. 1, 1959, would be eligible for $200,000 in property tax exemptions. Seniors would continue to receive exemptions for which they are currently eligible, and the ordinance would not change the borough’s hardship provision, which caps a qualifying senior’s tax bill at 2 percent of gross annual household income.
Propositions 3 and 4, in our view, also are forward-thinking measures as the borough administration looks at changing economic and demographic trends.
The sales tax cap has not changed since it was put in place in 1965, and with the state government continuing to cut spending, it is reasonable for borough administration to expect to pick up some of those costs. That is especially true when it comes to education, and, in fact, borough sales tax revenue is dedicated to education funding.
The phasing out of the borough’s portion of the senior property tax exemption also has been proposed with an eye on the future. The borough’s senior population is expected to continue to grow, with projections showing that residents over 65 will make up a quarter of the borough’s population in the next 15 years. Should the borough’s senior exemption stay in place, that would mean a shrinking tax base as more residents become eligible, and quite likely, future administrations and assemblies would be looking at increasing mill rates to make up the difference. With Navarre reaching the end of his current term in 2017 and term limits preventing him from running for re-election, it will be a new administration running the borough in 2018 when the provisions of this ordinance begin to kick in.
Certainly, there is a reluctance among many borough residents to pay any more in taxes than we already do. We expect the borough administration to continue to keep an eye on the bottom line, as it has with the various efficiencies that have been implemented over the past few years.
However, the propositions on this year’s ballot represent a well reasoned approach to the borough’s long-term financial health, and as such, we encourage voters to give them the same well reasoned consideration.