MEMORANDUM

KENAI PENINSULA BOROUGH

FINANCE DEPARTMENT

TO: Timothy Navarre, Assembly President

Members of the Kenai Peninsula Borough Assembly

FROM: Chris Moss, Sales Tax Committee Chair

Members of the Sales Tax Committee

DATE: September 27, 2002

SUBJECT: Assembly Ordinance 2002-39 amending numerous provisions of the KPB Chapter 5.18, Sales Tax

On November 20, 2001, Assembly President Navarre appointed Chris Moss as chair of a Sales Tax Subcommittee, along with Assembly Members Paul Fischer and Pete Sprague, Jeff Sinz-Finance Director, Troy Tankersley-Sales Tax Supervisor and Colette Thompson-Borough Attorney. Non-committee regular participants included: Craig Chapman-Controller, Terry Eubank-Auditor and DeRay Jones-Auditor.

The committee developed and generally followed a work plan, a copy of which is attached. The primary objective of the committee's work was a simpler, more equitable, and more progressive sales tax system. The work plan included meetings with representatives from all five taxing cities located within the borough. The work of the committee began on December 12, 2001, and was concluded on September 4, 2002. Although the cities could attend any committee meeting, all the cities were formally invited for review and input March 18, 2002 and April 4, 2002. The committee found the input provided by the city representatives to be insightful and helpful in analyzing and finalizing revisions to the sales tax code.

The committee delayed its work during the period from April 4, 2002 to August 13, 2002, because of the potential impacts of HB303, legislation that could have resulted in the establishment of a statewide sales tax. Mr. Larry Persily, Deputy Commissioner with the Alaska Department of Revenue, attended August 13, 2002 and assisted the committee by providing insight as to future legislative action on a statewide sales tax. Despite the potential for the establishment of a statewide sales tax during the next few years, the committee believes the borough should nevertheless continue to move forward with revisions to the local sales tax code. On September 4, 2002, the sales tax review committee completed its work plan and approved a set of recommended changes to KPB Chapter 5.18. The proposed changes are summarized in the attached sheet and reflected in the attached ordinance. The committee recommends assembly approval of the changes.

Attachments