The Real New Feudalism Coming to the Valley
Contributed by Dana Raffaniello
Before examining what Ordinance 26-032 does, it is worth examining how it arrived.
This ordinance, which would permanently eliminate the Borough's primary revenue authority and restructure the entire tax system for over 100,000 residents, was introduced by a single assembly member. No Borough staff contributed to its design. No fiscal note was produced. No formal legal opinion from the Borough Attorney was requested or published before introduction. No working group reviewed it. No committee vetted it.
One person drafted it, introduced it, and has been promoting it on social media with imagery crafted to provoke an emotional response rather than invite a structural one. Emotional frustration, no matter how real, does not change the Borough's legal obligations or balance its budget.
There is a reason the emotional case has been made loudly while the structural questions have gone unanswered: once this community examines the fiscal note that was never produced, the legal opinion that was never requested, and the contingency plan that does not exist, the emotional case becomes considerably harder to sustain. This is a permanent decision. It deserves analysis, not capture.
The desire to reduce residential property taxes is not new, and the assembly member who introduced this ordinance is not alone in feeling it. Mat-Su residents have been pushing for property tax relief for years. That pressure is real, the frustration behind it is legitimate, and this community has earned the right to a serious conversation about reform. But a question this consequential deserves more than a solo effort. It deserves a formal working group drawing on the Finance Department, the Borough Attorney, the full Assembly as a body, and meaningful public input before any permanent action is taken. What we have instead is a first draft with no safety net, promoted as a finished solution.
That process gap matters, because it shows in the details.
The assembly member who introduced this ordinance has publicly acknowledged the revenue math. In response to constituent questions about the missing fiscal note, he stated that 6.5% “lowers taxes by 9 million dollars,” and described that as the goal. That statement is an admission, not a reassurance. The Borough cannot run a deficit. It cannot borrow its way through a shortfall. It must balance its budget every single year. So a stated, intentional nine-million-dollar reduction in revenue is also a stated, intentional reduction in something the Borough currently funds. No public accounting of what gets cut has been offered. No service. No road. No school program. Just the number, presented as good news.
Compounding that problem, OR 26-032 does not actually eliminate all property taxes. The no areawide property tax, road service area taxes, and fire service area taxes all remain. If the sales tax underperforms its projections, and the Borough Manager has already noted publicly that no historical sales tax data exists for Mat-Su to base those projections on, those remaining property taxes become the only available correction mechanism. Mat-Su homeowners could find themselves paying a new sales tax on groceries, utilities, and medical bills while simultaneously watching their road and fire service tax bills increase to absorb the shortfall the ordinance creates. That outcome is not a remote possibility. It is the logical consequence of eliminating the primary revenue tool while leaving the secondary ones in place, with no contingency provision anywhere in the ordinance text.
Now consider who the areawide property tax elimination actually benefits.
Currently, for-profit hospitals and medical facilities in the Borough pay areawide property taxes, as they should. Under existing Alaska law, nonprofit hospitals already receive a property tax exemption for their qualifying activities, a reasonable recognition of the community benefit they provide. For-profit medical facilities have no such exemption and contribute to the areawide tax base like other commercial properties. Under OR 26-032, that contribution goes to zero. Not reduced. Not adjusted. Zero. And those same facilities will pay minimal sales tax in return, because the ordinance exempts wholesale transactions, business-to-business services, and most of the commercial channels through which large facilities manage their operating costs.
Meanwhile, the patients of those facilities will pay 10.5% in combined borough and city sales tax on every medical bill in Palmer. A single medical episode does not generate one bill. It generates separate invoices from the hospital, the surgeon, the anesthesiologist, the radiologist, and the imaging center. Each is a separate taxable transaction under the ordinance as written. The sickest people in our community would be taxed at the highest combined rate in the Borough while the for-profit facilities billing them pay zero areawide property tax.
Out-of-state commercial and industrial property owners face the same structural windfall. Their assessed value contributes to the areawide property tax base today. Under OR 26-032, it does not. Large retailers and industrial operators structure their purchasing through wholesale and business-to-business channels explicitly exempt under the ordinance. The burden does not shift to them. It shifts to the Mat-Su family buying groceries and heating oil in January.
The $1,000 taxable cap built into the ordinance compounds this problem in a way that deserves plain language. Under OR 26-032, the maximum sales tax on any single transaction is $65, regardless of the purchase price. A Mat-Su waitress earning $12 an hour buys a $3,000 used car. A corporate executive buys a $90,000 vehicle. Both pay exactly $65 in borough sales tax. For the waitress, that $65 represents 2.17% of what she spent. For the executive, it represents 0.07%. The cap, presented as consumer protection, functions in practice as a discount for high-value purchases and a proportionally heavier burden on everyone else. That is not a distribution of the tax burden. That is a structural transfer of it, from those best positioned to pay toward those least able to absorb it. If property tax is feudalism because the lord collects from the serf who works the land, a capped sales tax with no income or ability-to-pay consideration is feudalism at the checkout counter.
The assembly member who introduced this ordinance has called property tax the new feudalism. A more accurate description of feudalism might be a system where a Palmer family pays 10.5% on their heating fuel and medical bills while out-of-state corporations pay nothing on their assessed commercial value in the Borough. The imagery is vivid. The math points the other direction.
Property tax reform is a conversation this community has earned and deserves. But it requires a structured, transparent process with real data, published legal analysis, fiscal safeguards, and a responsible transition path. Permanently prohibiting the Borough from ever reinstating property tax authority, before a single day of real sales tax collection data exists, is not reform. It is a permanent decision made on the basis of projections produced by one person, with no independent review, and no mechanism to correct course if the projections are wrong.
The door OR 26-032 closes only opens one way. That is too consequential a decision to rest on a solo effort, however well-intentioned.
Residents deserve real relief. This community deserves a process worthy of the stakes.