The Project Anchorage Sales Tax Proposal would establish a 3% sales tax in Anchorage to reduce property taxes and fund public projects.
In the current version of the proposal, two-thirds of the revenue would provide property tax relief. The remaining third would go to building new facilities which would be determined by Anchorage voters. It’s expected to bring in $180 million, and would only apply to the first $1,000 of an expense.
If passed, voters would weigh in on the measure in the April election.
The proposal has 8 main projects:
- Ship Creek Riverwalk, Indoor Market and Food Hall
- Anchorage Snow removal equipment fleet one-time overhaul
- East Anchorage Sports and Nordic Aquatic Complex
- Anchorage public safety vehicle fleet one-time overhaul
- Municipality Wide Four-Season Trail Facilities
- Downtown Arts and Entertainment Redevelopment
- Girdwood Arts and Recreation District
- Eagle River Sports and Recreation Facility
The Anchorage Assembly introduced five alternative proposals at a Tuesday meeting, that offer changes to tax amounts, and exemptions. The next public hearing on the tax will be held at the regular assembly meeting on Jan. 7.
Anchorage Economic Development Corporation President and CEO Jenna Wright says a tax would allow Anchorage to invest in itself.
This interview has been lightly edited for length and clarity.
Jenna Wright: It's not necessarily about we need a sales tax, but rather, we need a mechanism that helps us to accomplish some of the things that a sales tax helps us to accomplish. It also helps us to capture more visitor spending, both in terms of the 10s of 1000s of commuters that come into our city each day for their work days, as well as the million or so visitors that we see [annually].
And then in addition to that, it also is going to provide property tax relief, because right now, Anchorage is within the top 5% of property tax paying counties in the entire US. And one major reason for that is because we don't have a diversification strategy. Most of city revenues come from property taxes, and so through this diversification approach, we really see it balancing out the revenue strategies, similar to what other cities and states do in the lower 48 and throughout Alaska for that matter.
Ava White: There have been some concerns that the tax would disproportionately impact low income residents. There's a study [commissioned by AEDC] that was recently put out by a couple UAA economists that found that the tax would burden low income residents the most and wouldn't really benefit renters. Are you concerned about that additional expense for renters and low income residents?
JW: Yes, this is a very important issue. Sales taxes are regressive because lower income households spend a larger percent of the income that they bring in as compared to wealthier individuals. Property taxes are also regressive, and so we can't necessarily change that fundamental fact, but what we can do is minimize the regressivity.
When we started developing the structure of the proposal that's being circulated today, we said, ‘what are the basic household necessities that every house needs? Let's exempt those so that we can try to minimize regressivity.’
And so, for example, most groceries, child care, medical expenses, rental housing, financial transactions, all of these things that are necessary, household expenditures are exempt.
Their findings showed that it was pretty balanced within the middle of the income spectrum, but the lowest income households in Anchorage were going to experience a disproportionate effect of the sales tax.
And so we took that data, we took it to the team, and said, ‘how can we make this more balanced and more fair for those households that are really struggling’, and ultimately, we are working through the process right now to create what's called a universal exemption.
Essentially, if you’re below a certain level of the federal income level you’d just be exempt.
AW: As it’s written right now, it is supposed to sustain no more than seven full calendar years. Let's say the projects that are built from this tax, how would they be kept up when this tax, you know, is over? Would this start a perpetual Anchorage sales tax for the foreseeable future?
JW: This is something that's new for us, and a lot of us are skeptical on the benefits of what a sales tax would bring. Part of the reason that we wanted it to be temporary is so that we could put an accountability measure in there that helped Anchorage residents be more comfortable with essentially trying out the sales tax.
The other aspect to it is that the capital projects are very specific, and so the way that it's written is we will invest in these particular capital needs, these particular capital projects, and then when those are finished being built, there's no reason to continue collecting the tax to fund those projects.
To answer your question on how we envision that we would maintain these facilities, there is a provision right now in the assembly ordinance that says that there would be a MAPS (metropolitan area projects) trust fund. And the vision with that trust fund is that we would deposit a percentage of the revenues each year that they're collected.
So for seven years, they would go into this trust fund, and it would go towards the operations, maintenance, you know, safety needs and things like that. And so essentially, the projects would be set up to be sustainable over the economic life of each of the projects
