Alaska News

Battle shaping up over Anchorage alcohol tax

The grainy video flashed onto a screen in a small conference room at Loussac Library.

It showed footage that Anchorage Assembly member Paul Honeman captured from a car window. On a dimly lit sidewalk, a tent appeared, and Honeman's voice was audible: "Look at all these clothes and sleeping bags."

"Could you imagine if this was your child or my child?" came the voice of Assembly member Dick Traini, referring to people who were sleeping on the sidewalk along Third Avenue in Anchorage.

The video, taken after an Assembly meeting one night last month, was part of a broader discussion in the Assembly's Public Safety Committee meeting that day, centered on problems associated with homelessness, alcohol use and a lack of facilities.

As he listened to people talk, West Anchorage Assembly member Ernie Hall felt a familiar frustration.

"Where are we going to find the money to do this?" he thought.

Then Hall remembered. For some time, Traini had been working on a proposal for an alcohol tax that could pay for problems associated with drinking. After the meeting, Hall approached Traini and offered to help.


Their joint effort coalesced Tuesday, when Traini introduced a ballot measure to tax retail sales of alcohol in Anchorage, with the new funds dedicated to combating health and safety problems associated with alcohol. If it gains Assembly approval after public hearings on Jan. 27 and Feb. 3, voters will decide the fate of the proposal in the April city election.

Traini came up with the idea. But Hall said it was after seeing Honeman's footage at the mid-December meeting that he decided to help fight to see the tax measure through.

He called himself "an avid supporter."

A battle brewing

While some details remain to be decided about Traini's proposal, including the exact tax rate, the local alcohol industry appears to be gearing up for a fight. Fairbanks and Juneau both tax alcohol at the local level but similar proposals have been successfully defeated in Seward, Nome and the Mat-Su Borough.

Darwin Biwer, owner of the downtown Anchorage bar Darwin's Theory, said the tax would deter customers from buying alcohol at bars or restaurants. He warned that the unintended consequences of the measure could be "severe" and said it would face resistance.

"We're going to fight, and we'll win," said Biwer, who also chairs the board of directors for the Alaska Cabaret, Hotel, Restaurant and Retailers Association. "We beat an alcohol tax in Seward (and) up in the Valley. We're going to beat an alcohol tax here. It's not going to happen. But it cost us a lot of money, a lot of hassle."

In an email, Dale Fox, the director of Alaska CHARR, said Traini gave industry representatives no notice before introducing the measure. Fox said the question should be asked whether the proposal would comply with state law for taxing alcoholic beverages, and whether it was legal to specifically dedicate tax revenues in Alaska.

In the city of Fairbanks, for example, money generated from the alcohol tax returns to the general fund and supplements property taxes, said chief financial officer Jim Soileau.

Anchorage municipal attorney Dennis Wheeler said the measure meets legal requirements. He said the wording of the measure is based on Anchorage's existing hotel and motel tax in the city charter, which also dedicates money to specific purposes.

When he signed on to Traini's proposal, Hall said he wanted to ensure that it amounted to revenue outside the city's tax cap, not just property tax relief.

"That's not going to do anything to deal with the problem," Hall said of property tax relief. "And this is identified as ... the No. 1 (community) problem we've got here."

Anchorage mayoral candidate Dan Coffey, a lawyer whose legal firm has represented clients that included members of the liquor industry, said he needs to see more details on Traini's proposal first but agreed that the topic is "certainly worthy of discussion." He acknowledged that the municipality, unlike the state, is allowed to dedicate tax revenues.

He also said he agreed with Hall and Traini that something should be done to address issues tied to alcohol abuse in Anchorage.

"Now, if this is a tool that can be used to address it, then, when I hear the details, then this might be something where I would say, 'OK,'" Coffey said. "But … it's a concept right now; it's an idea."

Paul Fuhs of the Fairview Business Association recalled what happened when the state increased the state alcohol tax to 10 cents a drink in 2002 on a pledge that at least half the money would be directed to rehabilitation programs. Instead, state spending on such programs dropped, he said.

In 2014, Fuhs was part of a group that successfully lobbied the state Legislature for a $4 million grant to go toward substance abuse treatment. The money came from the state alcohol tax fund but has not yet been spent, with questions remaining about how it will be used, Fuhs said.

Devin Kelly

Devin Kelly was an ADN staff reporter.