The alcohol tax passed by Anchorage voters in 2020 came with clear rules on how the money would be used — enhancing public safety, preventing domestic violence and child abuse, expanding substance misuse treatment and addressing homelessness.
Tiffany Hall, CEO of Recover Alaska, a nonprofit aimed at reducing harmful effects of alcohol use statewide, said her organization was one of the tax’s main supporters.
“One of the purposes of it was to try to create new services, to try to get upstream and stop the need for all of these crisis intervention services, whether that's in domestic violence or homelessness or treatment,” Hall said.
The alcohol tax has brought in tens of millions of dollars since it took effect. But much of that money has not gone to new programs. City officials say the tax passed around the same time that a lot of local service providers lost federal and state funding. And so, according to Ona Brause, director of Anchorage’s Office of Management and Budget, about 80% of alcohol tax revenue has actually gone to replace that lost funding — and keep the providers afloat.
“The community demand was so great for those services that if that funding had resulted in disappearing entirely, we would have had an even bigger problem on our homelessness front and our other provision of social service network opportunities,” Brause said.
The remaining 20% has gone to administrative services and supplementing existing city departments, like adding prosecutors and updates to the police department’s crime lab.
Now, five years into the alcohol tax, there’s another challenge: The city is facing a budget crisis. Long reliant on property taxes, and with declining state revenue over the past decade, Brause said the city must have hard conversations about all of its spending. That includes the alcohol tax.
“We have this new line of revenue that was established with specific intent,” Brause said. “But I think that the outside world made some choices for us that we have to ask whether or not those choices are the same choices we should be making going forward.”
Alcohol tax keeps providers going
Providers that receive a portion of the alcohol tax revenue say the funding has been vital in the face of federal cuts.
Keeley Olson is the executive director of Standing Together Against Rape, or STAR. She said the nonprofit has received about $550,000 from the alcohol tax annually, and that funding goes toward prevention efforts, including education for students around consent and bodily autonomy.
“We would not have been able to provide all of the prevention that we do throughout the municipality,” Olson said. “Another way that we use the alcohol tax funding is providing counseling.”
Another organization that receives alcohol tax funding is Abused Women's Aid in Crisis, or AWAIC, a domestic violence shelter provider. AWAIC CEO Randi Breager said her nonprofit has received about $225,000 annually from the tax, and without that, she would have to cut shelter staff.
“Instead of 67 survivors being served at one time, we might have to reduce that into a number that we can safely manage with less staff,” Breager said. “And we're turning away people every day already. And so we already know the current size of the program we have does not effectively meet the needs of the city.”
Both AWAIC and STAR used to receive money from the federal Victims of Crime Act, which got its funding from fees paid by people convicted of white collar crimes, instead of tax dollars. However, Olson said there has been less of a focus on prosecuting those crimes under the Trump administration, and that decision has had ripple effects.
“I think it's important that people understand that what happens at the federal level can have a significant impact on what's happening at the municipal level,” Olson said.
A search for new revenue
As officials weigh how to spend the alcohol tax moving forward, some providers are looking for alternative funding. Breager said AWAIC is working on a campaign to receive 50 percent of its funding from community support by 2028, with the rest coming from grants. She said the shelter is currently operating at a deficit and needs to diversify its revenue.
“The majority of all of our funding is federal or state, through federal pass-through, and it's just not sustainable,” Breager said. “We are fully expecting a continuation of cuts in that area, and we're going to have to rely on the community more.”
Others say they hope to see the alcohol tax more evenly distributed among social services that qualify for it.
Hall with Recover Alaska said most of the tax revenue has gone to homelessness services, sometimes at the expense of other areas.
“That three of the six years have $0 allocated to prevention and treatment of substance use disorders and mental health support is a travesty, and it just makes no sense to me,” Hall said. “The money is literally coming from alcohol. Some of it should be going to prevent and treat alcohol use disorders.”
Hall said she recognizes that addressing homelessness is a major political and social issue for Anchorage, but she wishes there was a larger focus on prevention.
“If we continue to only focus on who needs help today without addressing how to make sure a lot of folks won't need help 10 years from now, then we're never going to solve the problem,” Hall said. “And it's a tricky issue. I don't know. I don't know how to answer it.”
Brause said ultimately, the city is focused on maintaining an existing level of support services while finding ways to improve.
“We're in this sort of balance point of absorbing the impacts from the state while trying to progress the conversation and change our current environment,” Brause said.
Brause said Anchorage has lost about a billion dollars in state support over the last decade and a big part of addressing the city’s needs moving forward will have to do with potentially bringing in new revenues.
“Are we going to maintain our allegiance to property tax funding, and that being the bulk of our funding,” Brause said. “Are we going to diversify our revenue streams to include other taxes?”
Several new taxes have been floated by Anchorage Assembly members, including a 1% sales tax, an increase to the city’s room tax and a new tax on short-term rentals. Additionally, Mayor Suzanne LaFrance’s administration is currently drafting a proposal for a 3% sales tax.
All of the revenue proposals are set to be taken up by the Assembly in mid-November. All of the proposed taxes would require voter approval.
