MEMORANDUM

TO: Pete Sprague, Assembly President

Members, Kenai Peninsula Borough Assembly

FROM: Chris Moss, Assembly Member

DATE: March 4, 2004

SUBJECT: Ordinance 2003-45, amending KPB Chapter 5.12 to provide for a flat tax on aircraft

After the third public hearing on this ordinance, Assembly Members Chris Moss and Dan Chay met with aircraft owners on February 13, 2004, to give them an opportunity to voice their concerns over the ordinance and to obtain aid in developing the ordinance. The development of categories for taxation of aircraft based upon weight appears to be a reasonable compromise to fairly address aircraft for personal use and commercial use, and to permit efficiency, accuracy, and fairness in the assessment of aircraft. Using the Manufacturers Gross Weight with Internal Load ("MGWIL") as a basis instead of the number of aircraft engines will permit ease of verification and promote equality in taxation.

The following amendment to 5.12.155(A) in Section 2 is proposed:

SECTION 2. That KPB 5.12.155 is hereby enacted to read as follows:

A. For purposes of taxation, aircraft that have been issued an N number by the Federal Aviation Administration ("FAA") by January 1 of the tax year shall be totally exempted from ad valorem taxes and shall be taxed [at the rate of $75 per year per aircraft per manufacturer's number of aircraft engines designed for that aircraft.] in accordance with the following flat tax schedule: