Borough takes comprehensive look at tax policy

  • Saturday, June 18, 2016 3:14pm
  • Opinion

By now, those who follow Kenai Peninsula Borough Assembly politics have had a chance to consider the package of tax code changes proposed by Borough Mayor Mike Navarre’s administration.

For those who haven’t had a chance to review the proposed ordinances, here’s a quick summary of what the changes include:

— Raising the taxable sales cap from $500 to $1,000 per transaction. The cap has not been changed since it was instituted in 1965. A notable difference from previous proposals to raise the tax cap is an exemption for residential rent. That measure is scheduled for another public hearing during the Tuesday assembly meeting.

— A package of about 40 items to revise some sales tax exemptions and tighten up the borough’s tax code. That ordinance is scheduled to be introduced in late July.

— Perhaps the most controversial measure, a proposal to phase out the optional $150,000 property tax exemption for senior citizens. The state mandated $150,000 exemption and the borough’s $50,000 residential exemption would remain in place, as would a hardship exemption capping property taxes at 2 percent of household income. That measure is scheduled for public hearings at assembly meetings on Tuesday and July 26. If approved by the assembly, it would go before voters on the Oct. 4 ballot.

The borough administration is planning town hall meetings in the coming weeks to discuss tax changes with borough residents, and there is certainly room for debate in each of these proposals.

Regarding the senior property tax exemption, for example, a reader to stopped by the Clarion on Friday to share his thoughts. His suggestion is that rather than eliminating the exemption, a residency requirement should be established — he thought 10 years was a reasonable amount of time — before seniors could be eligible for the full exemption.

We encourage borough residents to provide that same type of thoughtful feedback on all the tax proposals. Accusing the borough administration of being against one group of residents or another does little to further the debate, but constructive criticism will certainly make for a much better public process.

We also would to acknowledge the goal of this legislation: to ensure that the borough tax burden remains fair and balanced. In recent years, borough administrators have seen the balance between revenue generated from sales taxes and property taxes change; this package is intended to reset the scales.

Likewise, we have in the past in this space been critical of piecemeal attempts to revise borough tax code, which, while not done intentionally, do tend to single out one demographic or industry. We’re pleased to see that the administration has taken a comprehensive approach to tax revisions this time around.

Nobody wants to see taxes increase, even by a modest amount. We want borough government to continue to operate as efficiently as possible. However, we also realize that from time to time it is necessary to evaluate and revise tax code, so that revenue generated is adequate to cover the services expected, and that the tax burden is shared as fairly as possible. This package provides a means of doing that, and we encourage assembly members and borough residents alike to give it thoughtful consideration.

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