Alliance of Concerned Taxpayers, Inc. v. Kenai Peninsula Borough
2012 Alas. LEXIS 55
Alaska2012Background
- In 2005 the Borough Assembly enacted Ordinance 9 increasing the sales tax from 2% to 3% with an effective date initially set for Oct. 1, 2005, later moved to Jan. 1, 2006.
- 1964 Borough voters authorized a sales tax up to 3%, which the Borough later set at 3% in 1965; reductions did not require new voter ratification under the savings clause of AS 29.53.420/AS 29.45.670.
- In Oct. 2005, voters approved Initiative/Prop. 4 requiring prior voter approval for capital projects over $1,000,000; a 60% supermajority was also required.
- ACT challenged the Ordinance 9 sales tax increase and sought to enforce Prop. 4; the Borough argued the 1964 authorization and 2006 repeal-referendum defeat ratified the increase, and Prop. 4 violated constitutional limits on initiative power.
- The superior court granted summary judgment for the Borough on both issues; ACT appealed, and the Borough cross-appealed on attorney’s fees.
- The Alaska Supreme Court affirmed the Borough on the sales tax issue and Prop. 4, and reversed the fee ruling, holding the local initiative power is statutory, not constitutional.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1964 authorization and 2006 repeal defeat ratified the sales tax | ACT argues no ratification under AS 29.45.670. | Borough contends 1964 authorization and 2006 defeat ratified the increase. | Ratification satisfied; ordinance valid. |
| Whether Prop. 4 is an impermissible appropriation under Art. XI, §7 | Proposition 4 narrows budget allocation but does not create an appropriation. | Prop. 4 improperly restricts Assembly's appropriation power via initiative. | Prop. 4 constitutes an impermissible appropriation; invalid. |
| Whether ACT qualifies for the AS 09.60.010(c)(2) attorney's fee protection as a constitutional litigant | Local initiative power is constitutional and merits protection. | Local initiative power is statutory; no constitutional right was at issue. | ACT not protected; no constitutional-right litigation. |
| Whether the 60% supermajority requirement in Prop. 4 was severable | Supermajority provision stands as part of Prop. 4. | If invalid, it may be severed without invalidating Prop. 4 as a whole. | Supermajority provision was severable; main holding on Prop. 4 stands. |
Key Cases Cited
- City of St. Mary's v. St. Mary's Native Corp., 9 P.3d 1002 (Alaska 2000) (interpretation of AS 29.45.650(a) in favor of municipal power)
- Anchorage Citizens for Taxi Reform v. Municipality of Anchorage, 151 P.3d 418 (Alaska 2006) (inititiative vs. appropriation analysis; core objectives)
- McAlpine v. University of Alaska, 762 P.2d 81 (Alaska 1988) (initiative to designate use of state assets is an improper appropriation)
- Pullen v. Ulmer, 923 P.2d 54 (Alaska 1996) (initiation can impair legislative allocation; core objectives)
- Carmony v. McKechnie, 217 P.3d 818 (Alaska 2009) (local initiative power is statutory in origin; public-interest litigant context)
- Griswold v. City of Homer, 186 P.3d 558 (Alaska 2008) (local initiative power statutory, not constitutional)
- City of Fairbanks v. Fairbanks Convention & Visitors Bureau, 818 P.2d 1153 (Alaska 1991) (initiative/repeal of appropriations; discretionary funds)