In its meeting April 21 in Seward, the Kenai Peninsula Borough Assembly again rang up the issue of expanding the borough’s sales tax on nonprepared foods. But this time, the matter was put back on the shelf.
Currently, the borough collects a 3 percent sales tax on nonprepared foods for three months of the year — the tourism season of June, July and August. The rest of the year, the borough doesn’t levy a sales tax on groceries, though the borough’s 3 percent tax is assessed on the sales of other goods and services. Borough sales tax revenue throughout the year is used to fund district schools.
Kenai and Seward, the home-rule cities in the borough, can set their own taxes, and choose to levy a sales tax on groceries year-round. In 2008, the borough assembly passed an ordinance to allow general-law cities — Soldotna, Homer and Seldovia — to do the same.
So, in July, you’d pay 6 percent sales tax on a can of beans in Kenai or Soldotna, or just the borough’s 3 percent sales tax if shopping in Kasilof or Nikiski. In December, you’d pay 3 percent sales tax on that can of beans in Kenai or Soldotna, and no sales tax in the unincorporated areas of the borough.
Discussion has come up in the assembly last year to do away with the seasonal tax exemption and charge the borough sales tax on groceries year-round. That discussion culminated in a resolution that the assembly passed at its meeting April 7, to ask voters whether the borough should split the length of time in which the borough taxes groceries to six months and lower the exemption period to six months. The issue was to go to voters in the October municipal election.
But after the resolution passed, Kelly Wolf, who represents the Kalifornsky area, made a motion to reconsider the resolution, not wanting to put the question to voters after all because he didn’t want to open the chance that the exemption could be reduced from nine months to six months.
“We have families that are struggling to put food on the table for their families. So as I ask for reconsideration for this ordinance, I’d like to do it on behalf that this is the right thing to do,” Wolf said. “As a representative of the people, I’ve heard them, and I am listening.”
On April 21, the assembly voted 5-4 to reconsider the matter.
The debate that followed touched on several issues. Some members, including Mako Haggerty, of Homer, noted that the public has already voted on the issue of sales tax on groceries. The current sales tax exemption came about through a voter initiative.
“It’s been to the voters before. The last two times they voted to maintain a sales tax holiday on nonprepared foods during the nine months of our offseason. So sending it to the voters again kind of seems pointless to me,” he said.
Wayne Ogle, of Nikiski, doesn’t want to see a sales tax on groceries, period, and at the very least doesn’t want to see the tax exemption period decreased.
“I have a fundamental issue with sales tax on nonprepared foods,” Ogle said. “Many, many municipalities around the country have made a policy decision that sales taxes on food is something that is not good public policy. It is an essential item that people need to have.”
Others, though, wanted the measure to go to voters. Brent Johnson, of Kasilof, said that this particular question, of a six-month tax and six-month exemption, is different than what voters have decided before.
“My position is that it’s a social issue. The voters are the ones that should decide social issues, and I would very much like them to decide that issue. I don’t want to decide it for them because I’ve heard loud and clear from constituents that say they don’t want to pay a six-month grocery tax, they would prefer to have a nine-month exemption. But I’ve also heard loud and clear from other constituents that say just the opposite — they say schools are so important that we want this tax to pass because it’s going to help fund schools,” Johnson said.
Sue McClure, of Seward, also said she’s heard mixed feedback on the matter.
“Since I heard such a mix, from my constituents and all the people, I’m more than willing to give it a shot to the voters,” she said.
The vote failed 5-4, with Ogle, Wolf, Haggerty, Stan Welles, of Sterling, and Kelly Cooper, of Homer, voting no. And Johnson, McClure, Blaine Gilman, of Kenai, and Dale Bagley, of Soldotna, voting yes. That means the issue will not go to voters and the borough’s 3 percent sales tax will stay as it is — being charged on groceries in the summer, and lifted the rest of the year.
Voters will still get to weigh in on grocery taxes in October, though. A voter initiative will be on the ballot, asking to repeal the assembly ordinance in 2008 that gave general-law cities the ability to tax grocery sales outside of summer months.