Anchorage residents won’t see a sales tax proposal on the ballot in the April city election.
The Assembly on Tuesday postponed voting on a bevy of competing ballot measures to institute a sales tax in the municipality, and passed a resolution setting the stage for a possible special election on the tax question later this year.
For the special election to occur, the Assembly must vote to send voters a sales tax ballot measure. Assembly members will again take up the matter and hear public testimony on March 4.
Last fall, Assembly members Randy Sulte and Felix Rivera introduced a measure that arose from Project Anchorage, an effort by the Anchorage Economic Development Corp. The version would establish for seven years a 3% tax on most retail goods and services. Two-thirds of the tax revenue would be used for property tax relief, and the remaining 1% would go into a trust fund that would pay for building public amenities like trailside facilities and recreation centers.
Later, other Assembly members proposed four more versions.
At Tuesday’s meeting, several Assembly members said they need more time to weigh the options and craft the best tax proposal for voters.
“If we are pressing toward an April vote on a sales tax, I’m a no on all five proposals,” Assembly Vice Chair Meg Zaletel said. “There is not a proposal I am comfortable with sending to the voters.”
Zaletel and Assembly member Anna Brawley pushed to hold a special election instead, and members narrowly approved the move in a 7-5 vote. The measure dictates that an election would be held no sooner than Aug. 1 and no later than Nov. 30, but is contingent on Assembly approval of a ballot measure.
The Project Anchorage proposal was met with both excitement and criticism by residents and city leaders. Some, like Sulte and Rivera, see it as a way to reinvest in the city, transform its public amenities and diversify the municipal tax base.
Proponents estimate the tax would generate at least $180 million a year and bring about a 16% drop in property taxes. That’s about $1,195 off the tax bill for a $450,000 single-family home.
The proposed tax has been criticized as primarily benefiting business owners and property owners, especially those out of state. An economic analysis found that even though many goods and services are exempted, it would disproportionately affect renters and low-income residents.
The list of exempted goods and services includes gasoline, prescriptions, food, licensed child care services, menstrual hygiene products and contraceptives. Households with income at or below 80% of the federal poverty line could apply for a tax exemption.
Assembly members’ alternate versions of the proposal call for a tax between a 1.5% and 3%, with less or none of the money going to property tax relief. Depending on the proposal, money would be spent on a combination of new public amenities, public safety improvements and city priorities or general government operations.
Assembly Chair Chris Constant, who has been vocally opposed to a sales tax, proposed a version that would send the question to residents as simply an advisory vote.
In a Jan. 5 letter to the Assembly, the coalition of businesses behind Project Anchorage said that changing the tax to fund general city government spending would cause it to fail with voters, and that property tax relief is critical to the tax receiving support.
On Tuesday, the Assembly heard more than an hour of public testimony from residents. Many cautioned against aspects of the various proposals or opposed a sales tax altogether.
Phil Cannon of Mountain View said the tax would be regressive. The property tax relief, while presented as a carrot to get voters to say “yes,” wouldn’t translate into rent reductions in his neighborhood, he said.
“Don’t ask my neighbors to pay for your sports center. Don’t ask my neighbors — that doesn’t feel OK to me,” Cannon said.
Several marijuana retail business owners and representatives of the hospitality industry said it would harm already struggling local businesses because the tax would be on top of existing taxes on marijuana and alcohol.
Others spoke in favor of the tax, emphasizing a need to improve Anchorage’s amenities and quality of life.
“I just feel this dying urgency that we need to do something as a community to improve Anchorage, to keep young people here,” said John Gregoire, one of the business owners who signed the letter. “I have a 24-year-old and a 15-year-old, and my 24-year-old is looking at leaving. Other people in that age range, that we need for the future of our community, are going to leave to go to other communities where there’s more stuff to do.”