CITY OF HOMER

HOMER, ALASKA

                                                                                                Mayor Hornaday, Stark

RESOLUTION 07-44

 

A RESOLUTION OF THE CITY COUNCIL OF HOMER, ALASKA, OPPOSING INCREASE OF KENAI PENINSULA BOROUGH SALES TAX RATE.

 

            WHEREAS, the Kenai Peninsula Borough (KPB) is proposing increasing its sales tax rate 1% from 2% to 3%; and

 

            WHEREAS, this increase would be additive on the City of Homer's 4 1/2% for a total of 7 1/2%; and

 

            WHEREAS, the present 6 1/2% sales tax rate in Homer (along with Seldovia's 6 1/2%) is the highest sales tax rate in KPB AND Homer is already one of the highest taxed municipalities in all of Alaska; and

 

            WHEREAS, it is generally acknowledged that a 6% - 6 1/2% rate is the highest a large number of people will pay without substituting purchases in lower-rate jurisdictions; and

 

            WHEREAS, although they are slightly lower than Homer's rate, Kenai and Soldotna have the same problem of substitution and are closer to Anchorage with its 0% sales tax rate; and

 

             WHEREAS, while few people will drive to Anchorage just to shop and avoid sales tax, many people routinely go to Anchorage for other reasons and shop while there; and

 

            WHEREAS, while 1% does not seem like a deal-killer in shopping, in fact many people so resent a high sales tax that they will reduce their purchases in KPB; and

 

            WHEREAS, the income to KPB and the cities from increased taxes is not proportional because of shoppers' marginal propensity to shop locally; it could in fact result in decreased income to KPB and the cities; and

 

            WHEREAS, low-income residents are particularly hard hit by high sales taxes; and

 

            WHEREAS, because of the information in the foregoing clauses, a reduction in local purchases will cause some merchants to lose sales and money and may be forced to close their doors, and

 

            WHEREAS, KPB's imposition of an increased sales tax may result in both a referendum on it and initiatives in both KPB and the cities to exempt food sales, all of which would probably succeed and would result in an absolute financial crisis in both KPB and its cities.

 

            NOW, THEREFORE, BE IT RESOLVED that the Homer City Council suggests that the Kenai Peninsula Borough not increase the sales tax rate.

 

 

                                                                        CITY OF HOMER

 

 

                                                                        _____________________________

                                                                        JAMES C. HORNADAY, MAYOR

 

ATTEST:

 

 

 

______________________________

JO JOHNSON, CMC, CITY CLERK

 

 

 

Fiscal Note: Not defined at this time.