Juneau voters will decide this fall whether to adopt a seasonal sales tax to make the most of the more than a million cruise ship passengers who visit Juneau each summer.
Some residents are wary of the idea.
It was a rainy September day on Thursday, but the wet sidewalks and streets were still lined with cruise ship passengers donning thin plastic ponchos and holding shopping bags.
Mickey Hall and her friends, Russ and Pat Genzmer, stood outside the Alaska Shirt Company in downtown Juneau. They were all holding the store’s iconic, bright red shopping bags.
“I got a sweatshirt, and my grandson got socks,” Hall said, laughing.
They were in Juneau for the day, visiting off the Nieuw Amsterdam cruise ship. Without looking at their receipts, they couldn’t say how much they paid in local sales taxes on the souvenirs they just bought.
“What is the sales rate?” Hall asked.
“I thought it was free,” Genzmer said, laughing. “I thought they had no sales tax in Alaska.”
That’s half true. While Alaska has no statewide general sales taxes, many municipalities have their own local taxes. In Juneau, that’s 5% on goods sold year-round. But that could soon change.
Juneau voters will decide this October whether the city should implement a new seasonal sales tax system. The city would bump its tax rate up in the summer when tourists are in town to 7.5%, then lower it to 3% in the winter to give locals a break.
The change would apply to most residents, with a few exemptions. Advocates for the system say it’s meant to take advantage of the summer tourists while also giving some winter relief to year-round residents.
Juneau Assembly member Neil Steininger supports the idea. He’s an economist and previously served as director of the Office of Management and Budget for the state.
“We have a lot of out-of-town visitors, and we have a lot of economic activity from non-residents in the summer, and so it allows us to shift some of that tax burden away from residents, making it even more affordable for individual residents in Juneau,” he said.
While cruise ship passengers Hall and the Genzmers say they won’t lose sleep over the tax increase, not everyone is on board.
Juneau resident Wayne Coogan is co-owner and general manager of Coogan Construction. He said he’s worried that implementing a seasonal tax structure in Juneau will disproportionately affect construction spending.
“Everyone knows that the construction industry, to a great degree, goes to sleep in the wintertime,” he said. “They bed down and wait for the weather to come back for what’s called the construction season. And so the heavy spending occurs in the summertime.”
While Juneau’s city government does offer some sales tax exemptions for construction materials, it doesn’t cover everything. Coogan said the seasonal change will make buying goods in the summer more expensive, which will hit consumers.
But other locals, like Joel Ferrer, said he sees the logic behind the system. He lives in Juneau year-round and owns a tourist shop downtown. He says he is willing to try it.
“The bottom line is, like, there’s no perfect system. There’s always going to be a glitch, or some people will be affected in a positive way. Some will be a negative way,” he said. “No one’s going to be totally happy with whichever.”
Other Southeast Alaska tourism towns like Ketchikan, Sitka, Craig, Pelican and Skagway have already adopted seasonal tax structures. All of them see a significant amount of summer tourism.
Ketchikan implemented a seasonal sales tax structure within city limits in 2023. The borough has a population of about 14,000 year-round residents, but it sees more than a million tourists each year.
Ketchikan Mayor Bob Sivertsen said the tax structure just makes sense.
“The reality of it is, the community sees our resources being used, our streets being crowded,” he said. “I think they see this as a positive way for the community to utilize the economy that we have, which is the seasonal economy, in the best interest of the community.”
The additional revenue the city takes in from the new system goes into its general fund and has paid for things like wage increases for city workers. Sivertsen said he hasn’t heard much backlash from the community about the system.
“We all understand that we have to pay for the services we get, but if we can get the visitors to pay for a larger portion of that in a short period of time, it makes sense,” he said.
Janice Walker runs Madison Lumber and Hardware in Ketchikan. She said while the new system hasn’t dramatically changed her business, it does cause some headaches.
“It’s just something every six months we have to do, and then they also have a sales tax-free day down here, so you got to do it for that day,” she said. “Anyways, for the retailer, it makes it a little more difficult.”
She said she supports the change as long as the revenue that the city takes in goes toward services that benefit year-round residents.
In Juneau, the sales tax boost in the summer is intended to offset another ballot question that would exempt essential food and residential utilities from local sales tax.
The cruise ship passengers on Franklin Street, Hall and the Genzmers, say go for it.
“Good for you guys,” Hall said. “People live here — they deserve a break.”
But it’s not up to them. Juneau voters will decide. The last day to vote in Juneau’s by-mail election is Oct. 7.
