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ITA Tax Cap Ordinance

The following is the actual revenue cap ordinance passed in 1996 by the Fairbanks North Star Borough, a second class borough. A few improvements were incorporated that year to tighten it, but it is very similar to the very first one, which Fairbanksans had been re-enacting every two years in order to keep it in force and unchangeable. (Voter approved initiatives in Alaska are automatically protected from change for two years.) A later version added wording to require use of the Fairbanks CPI, allowing the Anchorage CPI to be used until such time as there was a Fairbanks CPI.

If you are looking at this type of thing for your city, remember that this one is only for a second class borough. Follow this link for the link for the Fairbanks City Tax Cap (Fairbanks is a first class home rule municipality). If, after reading this, you are confused, try our brief explanation.

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SUMMARY OF ORDINANCE TO BE ENACTED

ORDINANCE ESTABLISHING MAXIMUM ALLOWABLE TAX REVENUES

"SHALL SECTIONS 3.08.141 AND 3.08.142 OF THE FAIRBANKS NORTH STAR BOROUGH CODE OF ORDINANCES BE ENACTED AS FOLLOWS? THESE SECTIONS WILL PROVIDE FOR LIMITATIONS ON THE MAXIMUM ALLOWABLE TAX REVENUES FOR THE FAIRBANKS NORTH STAR BOROUGH. UNDER SECTION 3.08.141 THE BOROUGH WILL BE ABLE TO LEVY OR IMPOSE ONLY THE SAME AMOUNT OF TAXES FOR ONE FISCAL YEAR AS THE BOROUGH LEVIED OR IMPOSED FOR THE PRECEDING YEAR, EXCEPT THAT THE BOROUGH CAN INCREASE THE AMOUNT OF TAXES LEVIED OR IMPOSED (a) TO ADJUST FOR INFLATION: (b) TO TAKE INTO ACCOUNT NEW BUILDINGS AND LAND COMING ONTO THE TAX ROLLS; (c) MAKE NEW PAYMENTS ON BONDS; (d) PAY FOR SERVICES APPROVED BY VOTERS; (e) PAY FOR NEW LEGAL JUDGMENTS ENTERED AGAINST THE BOROUGH; AND T0 PAY FOR EXPENSES IN EMERGENCIES. SECTION 3.08.142 PROVIDES A FORMULA AND DEFINITIONS FOR THE LIMITATIONS OF SECTION 3.08.141."

Chapter 3.08

ORDINANCE ESTABLISHING
MAXIMUM ALLOWABLE TAX REVENUES

Sections:

3.08.141 Total amount of borough tax that can be levied or imposed.

3.08.142 Computation of maximum allowable tax revenues.

3.08.141 Total amount of borough tax that can be levied or imposed:

A. Except as provided in this section, the total amount of municipal tax that can be levied or imposed during a fiscal year shall not exceed the total amount approved by the borough assembly for the preceding year by more than a percentage determined by adding the percentage increase in the Federal Consumer Price Index for Anchorage from the preceding fiscal year.

B. The limitations set forth in subsection A do not apply to the following:

1. Tax on new construction or property improvements which occur during the current fiscal year;

2. Any appropriation made to pay or secure payment of principal and/or interest on bonds;

3. Taxes required to fund services authorized by voter approved ballot issues;

4. Funding of new judgments entered against the Fairbanks North Star Borough;

5. Special appropriations necessary on an emergency basis to fund unavoidable expenses insuring the public peace, health or safety.

C. The Borough Assembly shall use the formula and definitions for computation of the total amount of borough tax that can be levied or imposed by applying the provisions of FNSB 3.08.142 and shall, by May 31 of each fiscal year, publish its calculations showing these computations for each taxing jurisdiction.

3.08.142 Computation of maximum allowable tax revenues:

The maximum tax revenue allowed under FNSB 3.08.141 is computed for the next fiscal year as follows:

A. Formula. The formula for the computation of maximum allowable tax revenue is (A-B) + D + F = G, where:

1. "A" equals the amount of tax revenue derived from actual taxes levied on taxable real property in each taxing jurisdiction in the current fiscal year and all other tax revenues;

2. "B" equals the amount of the actual payment of principal and interest on bonds made in the current fiscal year, less actual state reimbursement for school construction debt;

3. "D" is product of the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) for Anchorage, Alaska during the prior fiscal year (CPI) and the net taxes levied (A-B) in the current fiscal;

4. "F" equals the total amount of all exclusions under FNSB 3.08.141B, and is the sum of all the following:

F.1 The taxes on new construction or property improvements equals the projected tax revenue from the value of that new construction or property improvements1 computed by multiplying the tax rate applied to properties in that taxing jurisdiction during the current fiscal year by the assessed value of the new construction and property improvements;

F.2 The principal and interest due in the next fiscal year on bonds, less state reimbursement for school construction debt, plus any over-adjustment or under-adjustment to actual reimbursement from the current year;

F.3 Taxes to provide voter-approved services;

F.4 Taxes for new judgments;

F.5 Special appropriations necessary on an emergency basis.

B. The point in time to use for the proper calculation of allowable property tax mill rates, for all taxing jurisdictions, shall be the next tax rolls as certified by the borough assessor on July 1st of each year.

This specific point in time shall be utilized for both the figures in the prior year and the current year.

C. As used in FNSB 3.08.141 and 3.08.142, the following definitions apply:

1. "Voter-approved services" includes but is not limited to:

a. A service specifically authorized by the voters of a taxing jurisdiction in any ballot issue,

b. Programs directly related to voter-approved capital projects which are in addition to services in the current fiscal year budget,

c. Services added by the creation or alteration of the boundaries of a taxing jurisdiction if the creation or alteration of the boundaries of said taxing jurisdiction were approved by the voters of said taxing jurisdiction. Taxes required to provide a "voter-approved service" are the estimated first full-year costs of voter-approved services less revenue other than taxes projected to be generated from the voter-approved services, for the number of months in the next fiscal year for which the voter-approved service will be provided;

2. "Current fiscal year' is the fiscal year during which the next fiscal year budget is prepared;

3. "Emergency" is the imminent threat of or the occurrence of widespread damage, injury, or loss of life resulting from any natural or man-made cause, including, but not limited to fire, explosion, flood, earthquake, landslide, mud slide, volcanic activity, avalanche, weather conditions, epidemic, blight, infestation, riot, loss of public utilities, shortage of food, water, fuel or clothing, or the accidental release or discharge of toxic substances or hazardous substances. "Emergency" does not include appropriations for the normal operations of a service area or the Department of Health and Safety;

4. "Fiscal year' means the fiscal year (July 1st through June 30th) for the Fairbanks North Star Borough;

5. "New construction or property improvements" means any improvement which generates a taxable value not on the tax roll for the current assessment year, including but not limited to:

a. Construction which increases the value of the property,

b. Any change in the status of land;

6. "New judgment' means the judgment reserved sufficient to cover the total cost of all judgments and arbitration awards during the next fiscal year, including:

a. Principal, interests, fees and costs,

b. Additional services which may be required by a court order;

7. "Next fiscal year" is the fiscal year following the current fiscal year and for which the new budget is being prepared;

8. "Prior fiscal year" is the fiscal year immediately preceding the current fiscal year;

9. "Taxing jurisdiction" means a taxing unit of the Fairbanks North Star Borough. A service area is a taxing jurisdiction.

Section 4. Effective date. This ordinance shall be effective on certification of the election.

PASSED AND APPROVED THIS _____DAY OF ________________ 1996.

_______________________
Presiding Officer

ATTEST.

_________________________
Clerk of the Assembly

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Paid for by The Interior Taxpayers' Association, Inc. PO Box 71892, Fairbanks AK 99707,
Donna Gilbert, President  ITA Phone (907) 456-8031.
Last updated
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