Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tax Policy topic
No spam. Unsubscribe anytime.
Assemblymember proposes tying borough sales tax cap to inflation; Johnson to keep voter approval clause
Summary
Assemblymember Mike Johnson introduced an ordinance on July 8 to index the borough’s $500 sales tax cap to inflation, raising the cap modestly each year according to the consumer price index.
Assemblymember Mike Johnson introduced an ordinance on July 8 to amend Kenai Peninsula Borough code (KPB 5.18.430) to index the borough’s sales tax maximum (the “cap”) to inflation on an annual basis.
Johnson told the Finance Committee the sales tax cap has not been adjusted since the tax’s adoption in 1965 and has lost most of its purchasing power; his fiscal note used the December 2024 consumer price index (CPI) of 2.2% to show the cap would rise from $500 to about $511 if the change were implemented now. He said the ordinance’s intent is to preserve the cap’s real value going forward rather than reset it to 1965 dollars.
Legal counsel Randy Kelly confirmed the existing subsection f of KPB 5.18.430 currently requires changes to the maximum tax to go to a public vote. Kelly noted an earlier draft of the ordinance would have repealed that voter‑approval requirement; Johnson said he will amend the ordinance to keep the voter‑approval provision in place and to send any change to the ballot.
Committee members discussed administrative and business impacts. Finance staff said December CPI numbers are typically available in March or April, and the borough could notify taxpayers shortly after that date. Multiple assemblymembers raised concerns that annual changes could create a compliance burden for local businesses, particularly those with contracts or rental agreements set for annual terms; staff and members noted the borough plans outreach and assistance if the change moves forward. Finance staff reported locally about 8,000 brick‑and‑mortar businesses are registered and roughly 4,000 report sales amounts above the cap; the number of remote sellers affected was not provided.
The ordinance was introduced for public hearing on Aug. 5, 2025. Johnson said it is his intention that any change be placed on the ballot for voter approval.
