KENAI — Soldotna residents will have the chance to weigh in on a proposal that would reinstate the city’s year-round grocery tax.
The Peninsula Clarion reported that the Soldotna City Council introduced an ordinance last week that would amend city code to restore the year-round tax on non-prepared food items.
Soldotna previously had to collect sales taxes in the same way that the Kenai Peninsula Borough did. But a 2008 borough ordinance allowed the city to levy its own taxes, meaning Soldotna didn’t have to participate in the nine-month grocery tax exemption.
A group of citizens challenged the ordinance and won the case in the Alaska Supreme Court in 2014. The state high court’s decision had allowed the group to collect signatures for a ballot initiative to repeal the borough ordinance.
Soldotna then had to reapply the exemption and only collect the tax during the summer months when the ordinance passed in the October 2015 municipal election.
Election results from the borough show Soldotna residents voted to keep the year-round grocery tax last year by a nearly 27 percent margin.
With the loss of the year-round grocery tax, Soldotna had been expected to lose $1.2 million in revenue. City Manager Mark Dixson said after a May budget work session that the city’s first-quarter payment came in $488,000 lower this year.
Dixson proposed increasing the city’s mill rate from 0.5 mills to 2.0 mills to help make up for the lost funds. But the City Council ultimately voted in June to keep the mill rate the same and use its reserves to fill the hole left by the loss of the year-round grocery tax.
The new ordinance that would bring back the tax is set to be discussed at a public hearing at a council meeting next week.
