ACT XIV

Stalled Until Adequate Donations

Are Available to Mount a Legal Challenge

TO AMEND KENAI PENINSULA BOROUGH PROPERTY TAX CODE CHAPTER 5.12 “REAL

PROPERTY AND PERSONAL PROPERTY TAXES”; TO REDUCE THE PROPERTY TAX CAP

FROM 8.0 MILS TO 6.5 MILS.

            WHEREAS, between FY 2002 and FY 2005 Kenai Peninsula Borough spending proposed by the mayor and authorized by the assembly has exceeded revenue by about $12 million; and

            WHEREAS, the proposed FY 2006 budget includes about $7 million more spending than revenue, which if approved by the assembly would total almost $19 million in deficit spending over a five year period; and

            WHEREAS, the assembly has authorized use of the fund balance (or “savings”) to pay for this excess spending; and

            WHEREAS, the fund balance is being used to balance the current deficit spending and will soon be at the minimum level required to retain favorable bond ratings, an indicator of fiscal responsibility for municipalities; and

            WHEREAS, the petro-chemical industry, a major source of borough tax revenue, is shrinking and downsizing; and

            WHEREAS, the size and cost of KPB government has substantially increased over the past few years despite an overall economic decline in the private sector; and

            WHEREAS, the Borough Administration and Assembly have failed to act in such a way as to limit the size and 

cost of government to what is sustainable over the long term; and

            WHEREAS, the Borough Administration and Assembly has spent savings to balance deficit spending and now has advanced proposals to raise taxes, without serious consideration of reductions in personnel, programs or agencies, which would reduce expenses and the overall cost of borough government; and

            WHEREAS, the current deficit spending crisis is best addressed by first reducing the size and cost of borough government, before raising tax rates; and

            WHEREAS, the awareness and direct participation of residents in the decision making process of borough government should be encouraged at all stages of the budget process;

            NOW THEREFORE, BE IT ORDAINED BY THE VOTERS OF THE KENAI PENINSULA BOROUGH;

            SECTION 1.  That KPB 5.12 shall be amended to read:

A.              5.12.010. Levied--Amount--Statutory authority. 

A.     All real property within the corporate limits of the borough which is not exempt from taxation by law or ordinance is subject and liable to an annual tax, for school and borough purposes, of not more than 6.5 mills on the assessed valuation of such property, unless the people of the borough by referendum authorize a tax levy at a higher rate and except as authorized by § 5.12.250 of the code. The borough shall collect such tax as is levied on the property within a city by the city council pursuant to law and Charter.

B.               5.12.120. Personal property tax--Levied--Amount--Statutory authority. 

All personal property within the corporate limits of the borough which is not exempt from taxation by law or ordinance, is subject and liable to an annual tax for school and borough purposes, of not more than 6.5 mills on the assessed valuation of such property, unless the people of the borough by referendum, authorize a tax levy at a higher rate and except as authorized by Section 5.12.250 and the owner thereof shall be liable for payment of the tax. This shall not apply to property subject to a flat tax and exempted from the ad valorem tax in this chapter. The borough shall collect such tax as is levied on the property within a city by the city council pursuant to law and Charter.

C.              5.12.250. Other taxes and tax liens--Levy to meet debt or natural disaster authorized when.  All real and personal property of the borough is subject to and liable for a tax levy at the maximum rate allowed by law without referendum, when a levy in excess of 6.5 mills is necessary to meet the obligation of a debt contracted for capital improvements and ratified by a majority vote of those qualified to vote and voting on the question, or to meet an emergency threatening the public peace, health or safety.

SECTION 2. These amendments shall take effect in accordance with Article 11, Section 6 of the Constitution of the State of Alaska; and Alaska Statutes 29, Section 29.26.180 and Section 29.26. 190.