(SitNews) Ketchikan, Alaska - On Tuesday, October 4, 2016, Ketchikan Borough voters will not only have the opportunity to vote on candidates for Borough Mayor, two Assembly Members, and two School Board Members, there are also two ballot propositions to be decided: A Cigarette and Tobacco Product Excise Tax and a Five-Year Extension of the School Capital Projects Sales Tax.

PROPOSITION 1 asks the voters: "Shall the provisions of Ordinance 1789-A, which establishes an excise tax on cigarettes and other tobacco products, be ratified?" If the voters say YES, this will levy an excise tax of 100 mills ($2 per pack of 20 cigarettes) on each cigarette brought into the Ketchikan Gateway Borough beginning January 1, 2017.

Proposition 1, the Cigarette and Tobacco Product Excise Tax is on Tuesday's ballot because on April 4, 2016, the Ketchikan Gateway Borough Assembly adopted Ordinance 1789-Amended, which established an excise tax on cigarettes and other tobacco products. The excise tax is conditioned upon voter ratification.

Net proceeds of the tax, including penalties, interest, and costs recovered, would be distributed as follows:

• 15 percent may only be appropriated by the Assembly for purposes of smoking and other tobacco cessation programs, tobacco cessation education, and/or tobacco-related healthcare purposes.
• 85 percent shall be deposited in the Schools Reserve Fund.

The effects on Borough taxpayers and citizens if Proposition 1 passes, the Borough would levy an excise tax of 100 mills ($2 per pack of 20 cigarettes) on each cigarette brought into the Ketchikan Gateway Borough beginning January 1, 2017. An excise tax of 50 percent of the wholesale price would also be levied on tobacco products other than cigarettes that are brought into the Ketchikan Gateway Borough. The excise tax on cigarettes and tobacco products would be levied at the wholesale level, not at the point of sale. This excise tax is separate from the Borough sales tax of 2.5 percent paid by consumers on non-exempt retail sales of cigarettes and tobacco.

It’s estimated by the Borough the tax would generate approximately $800,000 in net revenue annually. Of that, $680,000 (85 percent) would be deposited in the Schools Reserve Fund and $120,000 (15 percent) would be restricted to appropriations for smoking or other tobacco cessation programs, tobacco cessation education, and/or tobacco- related healthcare purposes.

The Schools Reserve Fund is used to make Borough cash contributions to Ketchikan Gateway Borough School District operations. In the current year, those cash contributions will total $8,196,550.

It should be noted, the $8,196,550 would be acash contribution to be used at the discretion of the Ketchikan School Board. The figure does not include additional Borough appropriations of $3,666,414 for school-related debt service, $400,000 for major maintenance of schools, and $225,156 in Borough General Fund appropriations for contractual services to the District.

Should Proposition 1 fail to be passed by the voters on October 4th, the Ketchikan Borough would not collect an excise tax on cigarettes and other tobacco products. These products would continue to be subject to the current Borough sales tax rate of 2.5 percent.

If Proposition 1 fails, the Ketchikan's Schools Reserve Fund would also forgo an estimated annual revenue stream of $680,000.

Additionally, there would be no tobacco excise tax proceeds (estimated at $120,000 if the tax is implemented) for smoking or other tobacco cessation programs, tobacco cessation education, and/or tobacco-related healthcare purposes.

PROPOSITION 2 asks the voters "Shall the general sales tax of one half of one percent (1/2%), dedicated to bondable school capital projects and insurance on school buildings and facilities, which was approved by the Assembly by Ordinance 1303 on March 22, 2004, ratified by the voters June 8, 2004, and which expires January 1, 2022, be extended until January 1, 2027?"

Proposition 2, a Five-Year Extension of School Capital Projects Sales Tax is on the ballot because on July 5, 2016, the Ketchikan Gateway Borough Assembly adopted Ordinance 1803, extending the 1⁄2 percent sales tax for educational facilities capital projects for five additional years to January 1, 2027, and placing the question on the ballot for the October 4, 2016 Regular Election.

The 1⁄2 percent sales tax for school capital projects was enacted upon voter ratification of Ordinance 1303 through a special election on June 8, 2004. Ordinance 1303 stipulates that the tax expires on January 1, 2022.

The 1⁄2 percent sales tax is being used to pay off $23,178,000 in school bonds, to fund major maintenance of school facilities, and to pay for insurance on school buildings.

The Borough owns 498,676 square feet of school-related buildings and facilities. The Borough and School District are charged with maintaining the facilities, and the Borough is charged with funding the major maintenance needs.

The School District’s FY 2018 Six-Year CIP Plan has identified an additional $13,125,636 in major maintenance needs between FY 2018 and FY 2023. Previously, the State paid the majority of the debt service costs for school bond debt. The Alaska Legislature has suspended the State’s debt participation program for newly issued school facility debt until FY 2021. If the Borough issues debt before 2021, the entire debt burden must be paid from local sources. If debt is issued after the reinstatement of the program, it may be reimbursed at reduced rates.

Additionally, on June 29, 2016, Governor Walker’s vetoes included reduced school debt reimbursement to municipalities by 25 percent, which resulted in a loss of $672,862 in the Borough’s School Bond CIP Fund in FY 2017. If the 25 percent reduction in bond debt reimbursement continues in future years, the payments required from the School CIP fund to meet bond payment obligations will reduce the funds available to make bond payments and implement the District’s FY 2018 Six-Year CIP Plan. Should the dedicated 1⁄2% sales tax not be extended, the School Bond CIP Fund is estimated to run out of funds prior to retiring existing school bond debt. Borough voters have pledged the full faith and credit of the Borough to pay the school bonds. Thus, if the School Bond CIP Fund runs out of money, the Borough must generate funds from other sources to pay the principal and interest on the bonds.

The effects on Borough taxpayers and citizens if this proposition passes, the 1⁄2 percent sales tax for the School Bond CIP Fund would be extended an additional five years from January 1, 2022 to January 1, 2027. Revenue from the 1⁄2 percent sales tax generated an average of $1,606,060 in annual receipts between FY 2005 and FY 2015. The extension is expected to allow existing school bonds to be paid off before the dedicated sales tax expires.

If Proposition 2 fails fails, the effects to Borough taxpayers and citizens would be that existing and future school bond debt must be paid from some other revenue source. FY 2017 school bond debt payments are the equivalent to a 2.9 mill areawide property tax levy. The Alaska Department of Education’s bond debt reimbursement program reduces the local burden to the equivalent of 1.4 mills in property tax.

In order to make up for the projected deficit in the School Bond CIP Fund, the Ketchikan Borough Assembly may choose to raise property taxes or other taxes; reduce education funding, capital projects or Borough services; or some combination of those alternatives.

The 2016 Regular Ketchikan Borough election will be held on Tuesday October 4, 2016. Polls will open at 7:00 AM and close at 8:00 PM.

Ketchikan Borough voters who live within the boundaries of the City of Ketchikan or the City of Saxman will vote on additional races.

Editor's Note:

The Ketchikan Borough Election is Tuesday, October 04, 2016

KGB Election Information - Sample Ballots, Borough Election Pamphlet, Polling Places, etc.
http://ak-ketchikangatewayborough.civicplus.com/172/Elections

City of Ketchikan Election Information, Polling Places
http://www.ktn-ak.us/electionsvoting

Reporting & Editing by Mary Kauffman, SitNews

Source of News:

Ketchikan Gateway Borough
www.borough.ketchikan.ak.us

 

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