Tax cap plan triggers suit

Legal action attempts tp remove initiative from state ballot in November

Posted: Monday, July 31, 2000

ANCHORAGE -- A new group has filed a lawsuit to remove the property tax cap initiative from Alaska's November ballot.

``I just know the devastation coming from it will affect all of Alaska,'' said Nome Mayor Leo Rasmussen, leader of Citizens of Alaska for a Strong Economy, which filed the suit. ``If you unplug $80 million from the Anchorage revenue stream, it's got to come from somewhere else.''

The initiative, if approved, would cap property taxes anywhere in Alaska at 10 mills, or 1 percent of assessed value. Future increases in property assessments would be capped at 2 percent per year.

The lawsuit cites several reasons for throwing the initiative off the ballot. It argues that the tax cap violates the state constitution by barring municipalities from fashioning their own local policies on taxation.

``I think the home-rule argument may be very strong because of the (state) constitution's strong language on home rule and the history of home rule,'' said former state Sen. Joe P. Josephson, who filed the suit for Rasmussen's group. ``It cuts so hard to the fiscal ability of cities to control their own destiny.''

The initiative also would allow voters who don't live in municipalities to help decide how local government services are funded, the suit says, again in violation of the constitution.

The suit says the state constitution prohibits ``local or special legislation,'' and therefore the initiative should be thrown out because property taxes aren't levied across the whole state.

The suit, also backed by AFL-CIO state leader Mano Frey, argues that the initiative process can't be used to limit appropriations under the constitution, but the impact of the proposition will be to cut spending for public services.

Other parts of the suit say the proposition addresses more than one issue, and the summary by Lt. Gov. Fran Ulmer isn't accurate and impartial.

Rasmussen and Josephson said the tax cap would cause major problems with selling municipal bonds, since cities and boroughs would have their taxing powers severely limited.

``In California, it killed the bond market for over eight years after Proposition 13 (a similar tax cap) was passed,'' Rasmussen said.

The California measure led to almost a 50 percent transfer of programs, projects and control to the state government, Rasmussen said, because the state had broader taxing authority.

``It's healthier if these (taxing and spending) decisions are made closer to where the issues will be felt,'' said Josephson, a Democrat. ``This proposition runs counter to that conservative notion.''

The group Tax Cap Yes, based in Anchorage, maintains the initiative is constitutional. Tax Cap Yes press secretary Eddie Burke said he was ashamed citizens would circumvent the public process to get their way.

The lawsuit was filed Friday in Superior Court in Nome, where it is scheduled to be heard by Judge Ben Esch. Josephson said there was adequate time for the lawsuit to be resolved before the election.

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