Voices of the Peninsula: Vote No on Prop 1 and demand changes to borough tax structure

  • By Nels Anderson and Mark Dixson
  • Wednesday, September 30, 2015 7:34pm
  • Opinion

The City of Soldotna represents 4,300 residents; but our library, parks, streets, and police serve the 30,000+ residents of the Central Peninsula who contribute only sales tax on products and services bought within City limits.

According to the University of Alaska Cooperative Extension Service, the average family of four in Soldotna/Kenai spends $199.93 per week on groceries. Assuming 75% is for non-prepared foods and all is spent within the City of Soldotna, the sales tax paid is about $4.50/week.

What do we provide non-residents and visitors for $4.50/week?

Library — Our library has issued 11,900 library cards; almost three times its resident base. Last year, the Library held programs for 6,368 children, 457 young adults and 7,920 adults with an annual attendance of 103,495. The Library provided 16,887 sessions on public computers, an estimated 10,000 wireless sessions and 2,190 sessions for early literacy.

Parks — Soldotna has four dedicated playgrounds for children to play, ample riverside locations to fish, boat launch, Wednesday night Music in the Parks, winter Movies in the Park, Sports Center facilities for skating and hockey with conference rooms for all non-profits to fundraise to provide essential services to the community. We’re planning new facilities to meet the region’s needs, including an indoor field house for indoor soccer, a track for runners and for seniors to walk and a few courts for volleyball and basketball.

Streets — We pave, plow and maintain the streets and sidewalks around Central Peninsula Hospital, the Soldotna Post Office, the Kenai Peninsula Borough and School District buildings, Soldotna High, Soldotna Prep and the Elementary Schools, as well as to local business and churches. We assist and usually are the first to plow State-maintained sidewalks on the Kenai Spur and Sterling Highways, and help maintain the Unity Trail within and outside city limits.

If Proposition 1 passes, what will the effect be on Soldotna residents?

Our services are primarily funded by sales tax, not property tax or user fees. Currently, all those who benefit from various City services are also helping pay for them. The Borough estimates that the passage of Proposition 1 would decrease City sales tax revenues between $1,050,000 and $1,200,000. A $1.2M loss represents a 15% decrease in Soldotna’s annual sales tax revenue.

For comparison, the City received just $280,000 in property taxes last year. If the City were to make up the difference in lost revenue by raising property taxes, our mill rate would increase from .5 to 2.79. For a property worth $250,000, the City’s portion of your property tax bill would go from $125 to $698 per year; an increase of $573. Rents will correspondingly increase to cover the tax increase thereby affecting the lower income families. Any of the increases would cost our residents on limited income more than the $4.50/week for the 9-month sales tax exemption.

There could also be cuts in non-discretionary services, the majority of which serve residents on a fixed income. Revenue source options would include non-resident fees at our library and parks and a closer look and greater need for annexation.

The rainy day is today. Proponents of Proposition 1 state Soldotna has excessive revenues and fund balance. The proponents claim we had excess revenues of $1.6 million last year. Not true. Our assets — not our cash reserves — increased by that amount due to state grant funding, primarily for construction of roads and other infrastructure. The City actually had a decrease in fund balance last year.

The City does have a significant reserve to save for a rainy day when state funding may be no longer available; that rainy day is today. A significant amount of our underground water and sewer lines are 30 to 50 years old. We have streets which will need to be resurfaced and the utility lines repaired and replaced. If the State is no longer helping to fund these projects, we will need our fund balance to repair, replace, and maintain vital infrastructure.

What is the solution? We need to fix the borough sales tax code with a system that allows us to continue to provide the great quality of life we enjoy, while paying for it in a way that is fair to all.

Vote NO on Proposition 1, and demand the Kenai Peninsula Borough update and revise its current tax structure, which the City as a general law city is required to follow. The current exemption of non-prepared foods is vague and includes many foods that are not “basic necessities” such as soft drinks and candy. The sale tax cap has never been adjusted for inflation. The cities, the Borough, the Prop 1 proponents and the Borough residents need to work together for a permanent solution with defined parameters, rather than inserting another blanket exemption that doesn’t solve any problem but instead creates many more.

— Submitted by Soldotna Mayor Nels Anderson and Soldotna City Manager Mark Dixson

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