By Naomi Klouda
The Alaska Supreme Court on Friday issued a ruling in favor of a citizen who wanted to let voters decide a grocery tax matter.
The court reversed lower court decisions in James Price v. Kenai Peninsula Borough and Johni Blankenship, clerk. Price, of the Alliance of Concerned Taxpayers, had challenged the borough in a 2010 lawsuit after Borough Clerk Johni Blankenship turned down his 2009 referendum. The citizen initiative presented the required number of signatures. It sought voter opinion to repeal a borough law that allowed cities like Homer and Seldovia to levy grocery sales tax even during a voter-decided tax holiday October to June.
“It’s my hope that this ends the practice of denying lawfully submitted initiatives,” Price said. “I’m hoping this will stop the practice the borough is using. They use the clerk process to stop the initiative process.”
Next spring, Price plans to take back up his referendum of 2009, when he gathered signatures and requested a public vote on a borough law that made it possible for individual cities to apply the tax. In April, he’s hoping to turn it into the borough clerk’s office for the matter to be placed on the October 2015 ballot.
At issue was whether or not Price’s referendum was legal. Clerk Blankenship ruled it was not, based on the advice of the borough attorney. Alaska District and Superior courts also concluded the proposed referendum lacked general, boroughwide applicability.
“Although anyone shopping for groceries in Soldotna, Homer or Seldovia would receive a benefit from the proposed referendum, the substance and stated purpose of the referendum is to take the power to tax groceries away from the residents of Soldotna, Homer and Seldovia and subject it to a boroughwide vote,” the lower courts said.
But the Alaska Supreme Court stated in its Friday ruling that the focus of the lower courts incorrectly looked at Referendum 2010-01. It should have looked at the ordinance (2008-28) that was passed by the Kenai Peninsula Borough Assembly.
This law tweaked the borough’s right to tax after voters had voted in a tax holiday. The clerk had argued state law gives the assembly the authority to levy and collect sales taxes and use those taxes on other sources. And it is the “assembly that can authorize cities to collect taxes that it does not.”
But in asking for a repeal of Ordinance 2008-28, Price was within legal rights allowed by state statute, the higher court ruled.
Borough residents who do not live in the general-law cities “have an interest in Ordinance 2008-28 and Referendum 2010-01 because they may shop and use other services in the general law cities. The intent of a constitutional ban on local and special legislation is to prevent the state from voting on a matter that only relates to one location,” the justices reasoned. Price was pleased with the Supreme Court ruling, but feels there’s a lot of work to be done fixing tax laws on the peninsula.
“On the Kenai Peninsula, we have a multitiered taxing system that frustrates people who can’t tell you what their tax rate is,” Price said.
General-law cities, Homer, Soldotna and Seldovia, were impacted by the borough’s sales tax. But “home rule” cities, such as Kenai and Seward, are not in the same city classification of laws.
Then there are places like Anchor Point, Nikiski, Cooper Landing and Moose Pass, which are service areas and do not have the power to impose sales tax, Price points out.
“Voters spoke at the ballot that they did not want a grocery tax on nonprepared foods collected year-round,” Price said.
The tax holiday October to June was voted in 2008 and applied in 2009.
“My referendum would take away the authority of the city council to impose grocery taxes that are not collected by the borough. That’s what my referendum was aimed at,” Price said.