OPINION: Let’s make Project Anchorage work for everyone

Last week, the Anchorage Assembly held a work session to introduce the first draft ordinance of Project Anchorage, a new proposal to create a 3% sales tax in the Municipality of Anchorage. Despite there being significant questions unanswered, co-sponsors Randy Sulte and Felix Rivera have decided to introduce the proposal at the upcoming Assembly meeting on Oct. 22. We can do better than this rushed, underbaked, and inequitable proposal.

As proposed, all residents and businesses in the Municipality would be taxed 3% per sale transaction. Two percent of the tax would then be repaid to homeowners as property tax relief, with the remaining 1% available for large-scale community revitalization, referred to as “Metropolitan Area Projects (MAPS).”

I write not in opposition to Project Anchorage. I’m hopeful about the kinds of doors an additional 1% in tax revenue can open, especially the opportunities to invest in and revitalize our neighborhoods. I have heard that excitement echoed around our city. What’s troubling and unjustified is the 2% property tax relief, which will only benefit select homeowners, even though every resident will pay in. I believe this proposal would be better off without it — exactly like the city this proposal is modeled on — Oklahoma City.

I’m Kirk Rose, the CEO of Anchorage Community Land Trust, an economic and community development nonprofit with a 20-year track record building concentrated opportunity and investment in Anchorage neighborhoods with the highest renters.

Sales taxes are almost always regressive, meaning low-income people pay more of their income to the tax. This is especially true of the way this proposal is structured. Neighborhoods like Mountain View, Northeast, Fairview, and Spenard are the city’s densest concentration of renters and low-income residents and will bear the brunt of this redistribution of the tax burden. Mountain View, for example, is upwards of 80% renters. More than anywhere else, this community will see its spending dollars transported to someone else’s tax refund. The fact of this wealth transfer seems inconvenient and irrelevant to Assemblymember Randy Sulte, whose South Anchorage and Girdwood district has high levels of homeownership and will benefit the most.

Already, rents are prohibitively high, and the cost of living can be nearly unachievable in Anchorage. The Anchorage Economic Development Corp., the organization leading the Project Anchorage effort, released a cost-of-living report for 2023 that said Anchorage is the 24th most expensive city in the U.S. out of 276 participating cities. Over the last decade, economic development literature has repeatedly stated that Anchorage’s most significant issue in retaining its workforce is the cost of living. I worry this tax will exacerbate that issue. It represents a 3% dilution of wages spent on local consumer goods, going to benefit homeowners and landlords who are unlikely to pass on the savings to renters. There are many credible reports on the difficulty of buying a home in the current Anchorage market. For renters to become the next generation of homeowners in our city, we shouldn’t make being a renter punitive.

In addition to these important issues of equity, I struggle to understand the rush to put this to voters without doing the due diligence to assess the impacts of an entirely new system of taxation for our city. Beyond the time needed to talk openly as a community about the merits of this proposal, a much more extensive economic analysis is necessary. Outside of one study that tested the basic feasibility of the idea, that is nonexistent so far. Here’s a short list of issues left unexamined:

What is the impact in real dollars on Anchorage’s renters, non-homeowners, and low-income families? How will their spending power be reduced? How will exemptions on essentials like groceries work? Will the burden be on residents to get reimbursed, or will it be on small businesses to do the math? Given current concerns over outmigration, what does this proposal mean for the cost of living for the young workforce we hope to attract and retain? Another stated goal of Project Anchorage was to maximize visitor taxation. Yet, Anchorage residents will pay 80% of this tax. How can we shift more of the burden to visitors? What are the impacts on Anchorage small businesses? Will this create a chilling effect on local business-to-business or consumer spending? We have conjecture, not research on these topics. I’m not asking us to study this thing to death; I’m just asking us to study it.

I’m all for the revitalization of Anchorage, but time isn’t our biggest enemy here — the potential damage and unintended consequences to residents and small businesses of this tax are. If we believe in this concept, we shouldn’t fear the public’s input to make it better or the time it takes to analyze it thoroughly.

I believe the proposal should go forward as a 1% sales tax to fund civic projects that revitalize Anchorage. Let’s explore the possibilities before locking ourselves out of good ideas.

Kirk Rose is the CEO of Anchorage Community Land Trust, a nonprofit disrupting concentrated poverty by building generational opportunity from within.

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