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Mayor Pierce proposes lower property taxes in exchange for sales tax increase

Aaron Bolton, KBBI News

Kenai Peninsula Borough Mayor Charlie Pierce unveiled a new tax proposal during a Homer Chamber of Commerce luncheon Tuesday.

The Kenai Peninsula Borough Assembly voted down Pierce’s plan to spend nearly half of the borough’s land trust fund to fill a roughly $4 million budget gap.

Pierce initially proposed spending $3 million from the fund, but later amended his proposal to $4.5 million in order to provide more education funding. The assembly voted both proposals down.

Pierce told southern peninsula residents in Homer Tuesday that he understands assembly members’ reasoning for rejecting the plan.

“We met with the assembly on the seventh, and certainly we agree we have a different directive now,” Pierce said. “We’re going to come up with a different budget, a different budget model.”

Pierce presented what he called his “four and four” plan. Instead of the current .5-percent sales tax hike currently on the table, Pierce wants to ask voters to approve a 1-percent sales tax increase in exchange for lowering property taxes.

“Four cents on the dollar in the way of sales tax and then take the mill rate from 4.5 down to 4 [mills.] So, property owners get a little bit of a reduction. It’s a shared effect.”

Pierce didn’t say how much revenue his plan would raise, but he said it will help incentivize voters who have historically voted down tax increases. Pierce plans to present the idea at the assembly’s regular meeting on May 15.

As for education funding, Pierce said without the ability to spend money from the land trust fund, the borough risks spending down its general fund if the assembly votes to give the district more than flat funding.

“I’m not going to get the support I need to use the land trust fund. So, we have to go to plan B,” Pierce said. “My recommendation is that we don’t go and deficit spend to the tune of another $1.5 million in the way of additional school funding.”

The assembly voted earlier this month to guarantee flat funding for education as a way to provide certainty for the school district. The district asked the assembly to fund education to the cap.

Superintendent Sean Dusek told the assembly last week that the district would have to cut 11 and a half teaching positions if the district is flat funded.  

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