Wednesday, December 06, 2006

Fairbanks Tax Revolt Continues - Local Activist Will Challenge City Council's New "Head" Tax

A local activist who organized a successful campaign to transfer sales tax approval authority from the Fairbanks City Council to local voters intends to challenge the new $20 per month employment, or "head" tax passed by the Fairbanks City Council on Monday December 4th, 2006. Full story published December 6th in the Fairbanks Daily News-Miner.

Donna Gilbert, president of the Interior Taxpayers Association, said on Tuesday she will organize a referendum aimed at repealing the head tax approved Monday by the Fairbanks City Council. If Gilbert follows through on her promise to apply for a referendum petition, it will delay implementation of the new tax — $20 per month on most employees working within city limits — until an election can be held. That could mean a wait of almost six months or more, according to an e-mail from city attorney Herb Kuss.

In Fairbanks, an applicant working toward a referendum has 30 days to file an application stating proposed ballot language. A successful applicant would then have an additional 90 days to collect enough signatures to call a special election, which would occur 60 days after those signatures have been counted, according to the e-mail.

If Gilbert follows through, chances of success cannot be dismissed. Gilbert successfully organized a ballot measure presented during Fairbanks' October 2006 municipal election reserving for voters the right to approve a general sales tax and preventing such a tax going before voters until the October 2007 election. That measure, Proposition 4, was on the same ballot as Proposition 3, which voters also approved and which reduced the city’s property tax rate to 0.5 mills, a drop of approximately 75%. The passage of both ballot measures created a deficit of approximately $10.3 million hole for the upcoming year and spurred discussion amongst city officials of a variety of revenue-raising options.

Earlier, the city council passed an $20 per month Emergency Services Protection Fee, applicable to all homeowners. This measure is expected to bring in $1 million in revenue each year. The city roughly estimates the head tax would generate an additional $4.7 million after costs. The two measures combined would eliminate half the deficit.

The provisions of the head tax ordinance define an employee under the tax as any person, aside from someone in the military, who receives compensation from an employer for work done in the city, “whether or not all of the services of such person are performed within the city”. The new tax will apply to those earning either a minimum of $500 a month or more than $10 an hour. The tax is intended to charge workers for only one job. To prevent tax evasion, however, the city will levy the tax on each job a worker holds, city officials said Monday. At the end of the year, a worker who paid more than $240 for the year can present copies of tax records to the city and apply for a refund for the extra amount. Employers are also required to keep at least three years of back records. Read the full text of the head tax ordinance HERE.

However, questions about applicability have surfaced. For example, Mayor Steve Thompson said one of the “gray areas” left for the city and its tax collectors will be to clearly define whether the tax applies to workers who spend only a portion of their time working inside the city. At present, he’s not sure if landscapers or fuel-delivery drivers working in the city — and for companies based outside of town — will need to pay.

To help resolve such problems, the city is creating two positions, one a senior-level spot, to implement the head tax. Officials have been conducting interviews for a month and hope to fill the two positions as soon as possible, Chief Financial Officer Ron Woolf said. One of their jobs will be to let the community know — through presentations to community groups, for example, and a fact sheet on the city’s Web site — exactly who the tax applies to, according to the mayor. Ron Woolf also said he expects two tax collectors will be enough to administer the head tax (Wonderful - just what they need, more bureaucrats).

Analysis: This is just another side of the box into which Fairbanks voters are attempting to place their city government. Proposition 3 gutted the property tax rate, and Proposition 4 transferred sales tax approval authority from the government to the people. Those were the first two sides of the box. Now Donna Gilbert proposes to erect the third side of the box by trying to take away one of the few remaining options the city council has to raise revenue; namely, the head tax.

The people of Fairbanks must be extremely frustrated with their local government. And what could cause this frustration? Let's review. Since George W. Bush took office, he's raised Federal spending, while simultaneously reducing revenue by approving ill-advised tax cuts disproportionately favoring the wealthy. Voila - instant deficits! In addition, by approving underfunded measures like No Child Left Behind, they imposed an increasing burden upon states and subordinate jurisdictions. The needs did NOT go away - instead, state and local governments were required to start paying MORE to fulfill those needs.

Yet local governments did not reduce discretionary spending to hold the line on local taxes, which began to escalate. They continued to spend money on "hero" projects like new convention centers and museum expansions. They continue to cater to special interests and alienate the mainstream community by passing intrusive and oppressive measures like the bicycle helmet ordinance and the anti-smoking ordinance, as well as punitive taxes on tobacco products. They continue to force us to pay for endless social engineering projects like affirmative action. One of the most egregious examples of this redundancy exists within the Municipality of Anchorage, which has two separate "equality" bureaucracies, the Equal Rights Commission AND the Office of Equal Opportunity. Two separate agencies performing essentially the SAME mission. Is it any wonder that people are getting pissed off enough to withhold THEIR money from rapacious local governments to cut off their taxaholism and spendaholism?

The voters of Fairbanks may be going too far, but local governments nationwide need to take heed of what Fairbanks voters are doing to their city government and decide whether or not to risk the same fate by continuing to mercilessly tax and oppress their constituencies. New York City just banned the use of transfat. Does the purported hazard really justify such an extreme measure?

America was birthed by people who grew tired of this oppression. Over 200 years later, we've forgotten this and allowed local governments to ravage our pocketbooks and rampage through our private lives worse than any Redcoats did during the colonial period. Fairbanks voters are apparently willing to take their city to the brink to deliver this message.

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1 comment:

  1. Now Borough residents are getting pissed off that the City's mismanagement is sucking them in too and are trying to think of ways to avoid the City. This head tax is ludicrous, and the City Council plans to implement it on December 24. How thoughtful. Fairbanks City Council to Employed Citizens: Bah Humbug. Merry Christmas to you, too, City Council.