The Haines Borough Assembly on Tuesday shot down a proposed ordinance to put the borough’s municipal sales tax designated for tourism promotion and economic development on the October ballot, surprising residents who put a citizens’ ballot initiative on hold this spring and were absent from the meeting.

The ordinance failed to advance to a second public hearing, with assembly members Jerry Lapp, Scott Rossman and Joanne Waterman opposed. A public vote in October could have shifted the tax revenues into the general fund.

"There’s always next year, and next year I won’t be so nice and sweet, either," said Sally McGuire, who brought the issue to the assembly in May. "You try to be nice to people and let them make up their own minds. Right from the get-go, I wanted to just get rid of the whole thing."

McGuire said she missed Tuesday’s meeting due to car trouble.

Borough clerk Julie Cozzi said the deadline for a citizens’ ballot initiative to make the October municipal election is Friday, Aug. 12, and an application would require legal review.

She said assembly members at the next regular meeting Tuesday, Aug. 23, could reconsider their vote, but the ordinance still would require a second public hearing that would be too late for the October ballot.

"For all intents and purposes, it’s dead," Cozzi said.

McGuire said her plan is to pursue a ballot initiative for the October 2012 election that would abolish the tax.

"I thought they were definitely going to put (the ordinance) through, and that’s why we stopped working on the (ballot initiative)," McGuire said. "Like I say, there’s always next year, and there’s an awful lot of people who would rather get rid of it, anyway, than designate it."

She had requested for the assembly to place the 1 percent sales tax on the ballot instead of waiting for a citizens’ ballot initiative. The tax generated $460,457 in fiscal year 2010.

The topic was a discussion item at two meetings before an ordinance was introduced in July to "delete the designation of 1 percent of sales tax proceeds for use for tourism development and promotion of economic development subject to voter ratification." The assembly introduced the ordinance with a 4-0 vote, when Rossman was absent.

The ordinance appeared to have the necessary four votes as of June, when Rossman voiced his resistance to changing the tax but said he’s "never been opposed to putting anything before the voters."

The assembly on Tuesday rejected the ordinance following comments from mayoral candidate Stephanie Scott and resident Joe Poor about the need to ramp up economic development efforts in the borough.

"Decide how you’re going to run an economic development department, not whether," Scott said.

She said dedicated taxes "can tie legislative hands" and "when the issue of removing the dedication of sales tax for economic development and tourism first came up, I thought people (also) were going to talk about the pros and cons of dedicating taxes" for capital projects and medical services.

"Instead, I think people are frustrated because there is no apparent economic development program being pursued by the borough," said Scott, who encouraged the assembly to again hire an economic development director.

Lapp and Rossman on Tuesday first voted against amendments to the ordinance, with no discussion prior to that vote. One amendment would have made the ordinance effective upon ratification by borough voters in October, rather than at the start of the next fiscal year.

Lapp said he agreed about the need for an economic development staff position in Haines.

Rossman said he’s "been back and forth" on the ordinance, but said previous public votes on the issue show the community finds the current tax preferable to putting the money in the general fund.

"I think when people know that the tax they’re paying is going to a specific purpose, they’re more likely to vote for it and support it," he said.

Waterman then joined Lapp and Rossman in the vote not to advance the ordinance.

"I have no opposition to it being on the ballot," Waterman said Wednesday. "I would like to see the assembly have more discussion about it."

She said one reason for supporting the ordinance earlier in the meeting was due to "the statement that if the assembly doesn’t do something about it, that a petition would be circulated, and that petition would ask that the entire tax is stricken."

Waterman said an update to the borough’s comprehensive plan would help with economic development concerns. Waterman noted she "would have preferred" that McGuire had been able to attend the meeting.

Assemblyman Daymond Hoffman on Tuesday said he also "could go either way" on the ordinance, but "would like to see it go to the voters."

The tax has been collected since 1986 to support tourism promotion, and later was extended to cover economic development efforts.

"I’m not a big fan of dedicated taxes, and I think we should eliminate them," said assemblyman Steve Vick, who voted in favor of advancing the ordinance. "I think there’s a use for them; I think a temporary use for a project or structure or something, that’s what they’re there for."

The borough’s government affairs and services committee will further examine sales tax revenues at a meeting 5:30 p.m. Tuesday, Aug. 16.

Resident Deborah Vogt, who has backed the ordinance at recent meetings, was out of town Tuesday. When reached by phone Wednesday, Vogt said, "I thought they were going to put it on the ballot," and said the wording of a potential ballot initiative "depends on who we think is more likely to support it."

"Certainly, there are some anti-tax people who would support it if it repealed the tax," Vogt said. "If the assembly had done it, I was for keeping the money, but repealing the dedication."