TO: Ron Long, Assembly President
Members, Kenai Peninsula Borough Assembly
FROM: John J. Williams, Kenai Peninsula Borough Mayor
DATE: September 19, 2006
SUBJECT: Ordinance 2006-35, setting the sales tax rate at 2 percent if Proposition 2 is defeated
It recently came to the administration’s attention that the effective date of the sales tax increase in Section 1 of Ordinance 2005-09 is currently set at January 1, 2006. Because a petition to refer Ordinance 2005-09 to the voters was approved in November 2005, before the effective date, and due to the passage of Proposition 5 in October 2005, this increase in the sales tax rate has not been implemented. Pursuant to AS 29.26.180, if Ordinance 2005-09 as it is currently worded is not repealed during the October 3, 2006, election, the sales tax increase will become effective immediately upon certification of the election.
The fiscal year 2007 budget, effective July 1, 2006 through June 30, 2007, was enacted based in part upon a 2 percent sales tax rate and is adequately funded. Also, the administration and borough businesses will need time to prepare for the increase in sales tax to 3 percent if ordinance 2005-09 is not repealed. Accordingly, the administration respectfully requests that the assembly introduce this ordinance without advance publication on September 19, 2006, and hear it on shortened time on October 10, 2006, the date the election will be certified, to set the sales tax rate at 2 percent. If ordinance 2005-09 is not repealed then the assembly will have the authority to increase the rate to 3 percent at a later date should that prove necessary. If ordinance 2005-09 is repealed in the election then this ordinance would not be necessary as the sales tax rate would automatically remain at 2 percent.
Your introduction and consideration of this ordinance on shortened time is respectfully requested.