Anchorage officials are seeking new revenue streams. Whether they’re pursuing funding to combat homelessness or modernize the city, they’ll have options.
This month, the Assembly will field pitches for new taxes that proponents hope will land on the ballot for the April 7 municipal election.
One is a revamp of the alcohol tax to primarily combat homelessness that failed in April. This time, supporters of the tax say they are dedicating the funds more specifically and will devote more resources to a public education campaign in the face of opposition from the alcohol industry.
Another is a broad-based sales tax that would fund nine specific projects. The projects center around modernizing downtown Anchorage and combating homelessness. It’s proposed by a group called Project ’20s.
The third is a sales tax proposed by Eagle River-Chugiak Assemblyman Fred Dyson that would subsidize property taxes and fund public safety.
To reach the ballot, a tax proposal needs eight of the 11 Assembly votes. None of the proposals have received a public hearing, which could happen as early as Jan. 14. The Assembly’s deadline to approve a proposal is Jan. 28.
The Assembly can augment the tax plans, approve multiple tax proposals, create their own tax proposal with elements of the three proposals or turn them all down.
Assembly Chairman Felix Rivera said the body as a whole has not discussed voter tolerance for multiple tax proposals on the ballot, but he’s talked with individual members about it.
“Personally, I would only want us to put one item on the ballot for people to consider,” Rivera said. "I think putting two or more on the ballot could be confusing, and in the end the voters could vote them all down.”
For the second year in a row, the alcohol tax campaign is being run by Recover Alaska, a group that seeks to reduce harm caused by alcohol. It’s sponsored by Assembly members Rivera, Austin Quinn-Davidson and Forrest Dunbar.
It’s a 5% tax, and the projected $11 million to $15 million it would raise per year would fund police and first responders; combat child abuse, sexual abuse and domestic violence; fund substance abuse treatment, mental and behavioral health programs; and address homelessness.
On Dec. 17, Assemblyman John Weddleton introduced an amended version of the proposal, which dedicated funding only to health and homelessness issues, not public safety.
In addition to the three sponsors, Recover’s Executive Director Tiffany Hall said she’s gotten the nod from three or four other members, with two more on the fence.
While Assembly members can vote for multiple proposals, Hall said it’s unwise to put multiple taxes on the ballot.
“I think that in a town like Anchorage, to get one tax passed at a time will be a sufficient challenge,” she said.
Hall said a lack of fundraising was the tax’s biggest impediment this past spring. Alcohol groups combined to raise about $300,000 to oppose the tax in the last election.
Efforts to reach Sarah Oates, president of the Alaska Cabaret, Hotel, Restaurant and Retailers Association, were unsuccessful Tuesday. CHARR was a strong opponent of the alcohol tax last spring, and in an editorial published by the Anchorage Daily News in December 2018, Oates argued that the alcohol tax was placing a community-wide problem on the shoulders of only some taxpayers.
“Why should hardworking Anchorage residents who want to enjoy a beer after work have to pay a tax to purportedly fight homelessness, when others wouldn’t have to pay a dime?” Oates said in the editorial. “The reality is homelessness is a problem frequently rooted in mental health issues.”
Hall said she needs at least $175,000 to mount a formidable campaign. So far, she has requests to five donors, most of whom contributed to the previous campaign. She’s asking for $25,000 to $50,000 from each.
Hall said the alcohol tax is also a low burden on most, even if they drink. Only heavy binge drinkers will see a noticeable difference, she said.
Lastly, she said the alcohol industry doesn’t pay for the damage it causes.
“Alcohol costs our state $1.84 billion every year,” she said. “I know that the industry pushes back and says why single them out? But it’s a huge, huge cost to our state in terms of health care, in terms of first responders, in terms of all of the different societal ills that come with alcohol.”
Project ’20s broad-based tax
Project ’20s proposes raising $375 million through a 3% sales tax to be spent mostly on various infrastructure projects, and about 40% of the funding would serve downtown projects. Another 40% would be spent on combating homelessness and upgrades to the city trail system. The plan also proposes funding a new fire station in Eagle River and fire evacuation roads in the Hillside area.
The tax has several exemptions, including food, gas and child care services. There is a $900 tax cap on any individual item or transaction. After the $375 million is raised, the tax would automatically sunset unless re-approved by voters. The tax is estimated to last about five years.
Many details about the project are still under wraps. Its campaign director is Moira Gallagher, formerly of Anchorage Economic Development Corp. She said she’s a volunteer, and the campaign has no paid staff. She declined to say who else was involved, or what companies are backing it. Gallagher did say there is no involvement with the alcohol industry, which stated in April that it would support a broad-based sales tax over an alcohol tax.
"What I can tell you is that our supporters represent some of the largest employers in Anchorage, in a swath of industries,” Gallagher said.
Gallagher said there has been some pushback regarding the downtown focus of the tax revenue. She said if Anchorage wants to grow and attract a top-tier workforce, it needs to have an attractive downtown.
“I talk to companies who lose employees who decide to go to Calgary. We’re losing people to Calgary!” she said. “It is not the cold, or the dark, or the isolation. But guess what? Calgary has a thriving downtown.”
Anchorage could, too, if it invested properly, she said.
The downtown investments are vast, from a restaurant, shopping and brewery district along Ship Creek to making Fourth Avenue more pedestrian-friendly to a redesign for the Alaska Center for the Performing Arts. To get people to visit the new amenities, Project ’20s would fund heated sidewalks throughout downtown.
The heated sidewalks have generated interest, Gallagher said. The sidewalks would be torn up and repaved over Tundra Tape, a carbon fiber heating tape developed at the University of Alaska Anchorage. She argues the sidewalks transform Anchorage into a true winter city.
“We could make the most amazing Ship Creek destination zone in the world. We could spend $500 million making Ship Creek the new Dubai," Gallagher said. "But if you can’t get there, then who cares?”
Gallagher said Project ’20s has built-in accountability with its sunset clause. Ten percent of the budget for each project will go into a maintenance fund to keep the new infrastructure long-lasting.
Once the actual tax proposal is written, it will list the projects chronologically, and no project can start until the funding is all the way there. If a project starts to look as though it will cost more than estimated, it will be scaled back to fit the budget, Gallagher said. Gallagher said some of the cost estimates came from city planning documents. Office of Management and Budget Director Lance Wilber also provided requested information to help with project cost estimates.
The proposal still needs an Assembly sponsor. Assemblyman Rivera said there are questions about Project ’20s, such as if the heavy downtown investment is equitable for residents throughout the municipality.
"While I appreciate the work that was done on this proposal, I think this proposal is a little too late in the game for the Assembly to consider it, vet it and put it on the ballot for this election,” he said.
Dyson’s sales tax
Dyson, one of two conservative Assembly members representing the Eagle River area, is also proposing a six-year, 3% sales tax; however, the scope of how his will be used is narrower.
Dyson’s tax would start July 1, 2022. Half would go toward funding increased public safety and half would go to subsidizing property taxes.
Originally, Dyson wanted the remaining 1.5% sales tax that would offset property taxes to remain indefinitely, but after meeting with Mayor Ethan Berkowitz, he plans to introduce an amended version where the entire 3% sales tax expires after six years.
“I believe this is good policy and will make our citizens more interested in supporting the concept,” Dyson said of the property tax offset in the proposal.
The temporary tax would fund additional police, dispatch workers, forensic lab technicians, prosecutors, public defenders, parole officers, mental health and treatment facilities and jails or prisons.
Dyson said there is some concern it could create jobs just to take them away after the tax expires. However, he said he hopes if positions are eliminated, it would be through attrition.
"I wanted it to be temporary so we could get up on top of this crime wave we are dealing with, and I figured that six years would be enough time to make a big dent,” he said, adding that voters could reauthorize the tax.
Dyson said he understands some of those services — such as felony prosecution, incarceration, parole services and others — are not funded at the municipal level.
“However, with approximately $45 million in tax revenue above the tax cap I believe the Municipality can develop innovative programs for involvement or support in those areas,” he wrote in the tax proposal.
Dyson said sales taxes are regressive in nature, so he is building in exemptions such as non-prepared food, prescription medication, education and child care services, as well as cable and real estate purchases. Dyson’s proposal has a $200 tax cap on any single transaction, but Assembly Attorney Dean Gates said Dyson’s new version could increase the cap up to $1,000.
Dyson said he thought about the regressive nature of using a sales tax to ease the tax burden on property owners, who tend to be of higher means, but overall he is strongly opposed to a “Robin Hood” form of government where you take money from the wealthy to give to the poor.
"Is it a legitimate role of government, in essence, to penalize the successful in order to subsidize the other folks?” he asked rhetorically.
Dyson said he hasn’t talked with other Assembly members to gauge support, but he said Anchorage has a lack of police, prosecutors and defense attorneys are facing heavy caseloads, and lab technicians are overburdened. The result is an environment catering to repeat offenders, he said.
“If you like the present rate of crime in our town, don’t vote for this,” he said.