Mat-Su voters to weigh alcohol tax

zhollander@adn.comAugust 5, 2013 

Voters in the Valley, a place not known for teetotaling, will decide in October if they want to pay extra for booze to bolster borough coffers.

The Oct. 1 ballot in the Mat-Su will include a 5 percent alcohol tax to raise revenue and diversify borough funding from its reliance on property taxes. The Mat-Su Assembly voted 6-1 in mid-July to put the tax before voters.

The tax would affect bars, restaurants and liquor stores throughout the borough. The cities of Houston, Palmer and Wasilla charge sales tax; they'd get an exemption to make sure the combined sales and liquor tax rate doesn't exceed 5 percent.

If approved, the tax could bring in $1 million a year from alcohol sales, borough finance director Tammy Clayton said. The estimate is based on an existing tax in the Fairbanks North Star Borough. The money will go into the Mat-Su borough's areawide budget, which funds education and emergency services.

Still, even some assembly members acknowledge the tax faces an uphill battle in this government-wary borough where bars stay open until 5 in the morning.

Darcie Salmon, an assembly member and former borough mayor permanently disabled by a drunken driver, declined to say which way he plans to vote in October though his history makes it pretty clear.

In 1989, a driver who later pleaded no contest to driving under the influence crossed the center lane and smashed head-on into Salmon's car outside Wasilla. Surgeons basically rebuilt Salmon from the waist down. He still walks with a heavy limp.

Despite his experience, Salmon supports letting voters decide if they want to be taxed. He's got his doubts.

"I'm not partial to drinking but I don't think the people will pass (the tax)," he said. "Anybody that hasn't gone through what I have probably is not going to vote for it. I hope I'm wrong."

Hundreds of Mat-Su residents ranked alcohol and substance abuse as the leading health issue facing the community, according to a survey conducted this year by the Mat-Su Health Foundation. In 2011, nearly 20 percent of Mat-Su adults reported binge drinking, according to a foundation survey. Among traditional high school students, 15 percent in Mat-Su Borough schools engaged in binge drinking.

Numerous studies show that alcohol taxes lead to significant declines in alcohol-related deaths, according to Robin Minard, a foundation spokeswoman.

Opponents, however, say alcohol taxes do nothing to decrease consumption.

"There's not much elasticity of demand in alcohol," said Dale Fox, president and CEO of the Anchorage-based Cabaret, Hotel, Restaurant and Retailers Association. Fox spent Monday in the Mat-Su meeting with restaurant and bar owners to talk about the tax. He said he's skeptical that it will pass.

"The Mat-Su is not the place known for bigger government," Fox said. "A new tax to add money to government -- I just can't believe that the conservative Mat-Su voters will vote in favor of it."

Bar owner Chris Cox called the tax "a bait and switch" to make up for the borough's bad budget decisions. Cox, who owns Klondike Mike's in Palmer, said he's rallying against the tax and hopes voters will recognize that the borough won't spend their money wisely.

"It seems that the government, they're doing everything they can to stymie business," he said.

Steve Colligan, the assembly member who sponsored the alcohol tax ordinance, said he normally doesn't favor new taxes.

In this case, however, Colligan said voters should think of the proposal more as a property-tax offset, a "dollar-for-dollar swap, property tax for sales tax" to cover alcohol-related borough costs like emergency services.

"The bottom line is it's up to the voters: do they want every senior citizen, every property owner to pay for that impact or do they want some assistance from the users?" Colligan said.

Another six Alaska municipalities charge alcohol taxes ranging from 3 percent to 6 percent. They are: Craig; Juneau City and Borough; Kotzebue; North Pole; St. Mary's; and Unalakleet.

Alaska has levied a state tax on alcohol in some form since before statehood. In 1933, the Alaska Territory started charging 5 cents a gallon for beer and wine. A 50-cent-per-gallon tax on hard liquor followed in 1937.

The state's current tax, collected mostly from wholesalers and distributors, ranges from 35 cents a gallon for small brewery beer to $12.80 a gallon for hard liquor. All revenues flow into the state general fund.

Reach Zaz Hollander at zhollander@adn.com or 257-4200.

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