Borough Attorney: Talkeetna sales tax would have to be spent on sewer and water system

On October 3rd, eligible voters who live inside the Talkeetna Sewer and Water District will decide whether or not to institute a three-percent sales tax to pay for the system.

Since the proposal was first made, some have questioned whether the money raised through the tax would end up being spent elsewhere. According to a recent letter written by Mat-Su Borough Attorney Nicholas Spiropoulos, the sales tax revenue would have to be spent on operations and capital projects related to the sewer and water system.

In the letter, which is addressed to Assembly Member Randall Kowalke, Spiropoulos says the informational memorandum accompanying the ordinance explicitly states that the tax revenue would be used for the sewer and water system. In addition, the letter states that existing borough code for the sewer and water system requires tax revenue raised in connection to the sewer and water service area must be used for that service. The Alaska State Constitution also addresses taxes within service areas to finance those services.

The issue of the Talkeetna sales tax proposal differs in one important way from the school sales tax proposal. In the latter case, the sales tax would have been area-wide. State law requires that area-wide taxes go into the general fund, which is used to pay for borough operations and capital projects. Thus, that sales tax would not have been limited by statute to only funding education. Since the sales tax proposal for Talkeetna is specifically within a service area boundary and would be raised with the purpose of funding that service, the money must stay there.

Spiropoulos says the sales tax, if approved by voters, could be used on maintenance, operations, repairs and renovations, or new facilities for the Talkeetna Sewer and Water Service Area. Administrative costs for the borough collecting the tax would fall under the umbrella of operations.

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