PALMER — The Alaska State Fair could owe the city of Palmer an extra $100,000 to make up for a sales tax increase fair officials say they did not factor into this year’s contracts and ticket decisions because it had not yet been proposed or approved.
The Palmer City Council approved a temporary 1% sales tax increase in late February, boosting the city’s tax from 3% to 4% between now and Oct. 31, 2027.
Income from the tax will be used to fund the city’s library building and help the city avoid raising property taxes to pay for the project. The tax was designed to capture two state fair seasons, City Council members said at the time.
The City Council passed the tax increase long after Alaska State Fair officials crafted, set pricing and signed contracts with upcoming fair vendors and artists for their popular concert series, State Fair Board President Jason Ortiz said in an interview early this month. The City Council did not consult with the Alaska State Fair before passing the tax, he said.
Because sales linked to those contracts occur after the April 1 effective date, the tax bill will include the new 4% rate, even though the dollar amounts in the agreements do not. Instead, the fair is on the hook for the extra payments, he said.
The tax increase also affects the fair’s income from ticket sales, Ortiz said. The fair charges a flat rate for tickets and does not tack on sales tax at the end of the transaction, absorbing it into the overall price instead, he said. Ticket prices have already been set for the year, with early tickets set to go on sale late this month. While officials could still raise those prices to cover the new tax, that is not something they plan to do, he said.
“We really don’t want to change the gate admission — it’s not our goal,” he said.
Fair officials expect to bring in $10 million in revenue this year. An extra 1% tax will cost them $100,000, he said.
The Alaska State Fair operates as a nonprofit, reinvesting its annual income into developing the fairgrounds’ services and properties, Ortiz said.
In 2024, the latest year for which financial documents are publicly available, the fair brought in about $11.4 million in sales and about $1 million in grants.
About $7.6 million of that income came from concert or gate ticket sales, according to the documents. After just under $11 million in expenses, the fair put about $1.7 million into its savings account.
Ortiz said those totals were similar last year.
Income from this year’s fair is earmarked for major projects on the state fair property, including an overhaul of the fair’s main concert space and a hotel project, Ortiz said.
City officials said they did not speak with the state fair before approving the tax increase because they did not directly solicit input from any of the city’s taxpayers.
“Even though they are a great partner with the city, so is Fred Meyer, and so is Carrs — and we didn’t invite them either,” City Manager Kolby Zerkel said in an interview.
Individuals and business representatives were permitted to speak during public comment periods at City Council meetings. No Alaska State Fair representatives spoke during those meetings.
Palmer Mayor Jim Cooper said he disagrees with the characterization that the fair is losing money because of the change.
“What is really happening is they aren’t losing money — they’re just not gaining as much as they expected,” he said. “I look at the grand scheme of things, and in all reality it’s good that we increased the tax because it’s going to help pay off the library faster.”
This story was originally published by the Mat-Su Sentinel and is republished here with permission.
