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State alcohol tax eyed as alternative to Anchorage proposal

  • Author: Devin Kelly
  • Updated: September 28, 2016
  • Published January 23, 2015

Anchorage Mayor Dan Sullivan said Friday he's not yet decided whether he's for or against a proposal to tax alcohol in Anchorage to pay for rehabilitation programs and wants to see more details first.

But Sullivan, part-owner of the downtown bar and restaurant McGinley's Pub, joined a chorus of groups saying the focus should not be on creating a new local tax but on tapping the existing state alcohol tax for treatment programs. The city's list of requests to the state Legislature for the current session asks that 100 percent of the revenues from the state tax be dedicated to substance abuse treatment to fill what city officials call an "unmet need."

"My first priority would be (to) get the money that's already been collected," Sullivan said in an interview at his office Friday. "It's not a lack of money. It's a lack of where that money is being directed."

Anchorage Assembly Chairman Dick Traini unveiled the tax proposal earlier this month with backing from Assembly member Ernie Hall. The first public hearing on the proposal, which would ask Anchorage voters to change the city charter to approve the tax and dedicate its proceeds to substance abuse treatment and facilities, will be held at Tuesday's Assembly meeting.

Public reaction has so far been divided. The tax proposal sparked an immediate reaction from the local liquor industry, which has vowed to resist it. At least two members of the Assembly, Amy Demboski and Bill Evans, say they're in opposition.

But the city tax proposal is also drawing an unenthusiastic response from groups that advocate for increased treatment and services, in part because of disillusion over past promises about how money generated by the state alcohol tax would be spent.

In 2013, the state alcohol tax collected nearly $40 million in revenue. State law requires that 50 percent of the alcohol tax proceeds be deposited in a fund for "alcohol and other drug abuse treatment and prevention." Legislators can appropriate the money to the Department of Health and Human Services to establish and run programs for the treatment of alcoholism and drug abuse, but state law prevents the fund from being dedicated to a specific purpose.

Members of the Fairview Business Association lobbied for $4 million from the fund last year for treatment in Anchorage and are now critical of the way the state's Division of Behavioral Health has allocated the money. They say they want to see 50 percent of the tax revenue returned to the community it came from, modeled after the state tax on fish. Until change happens, association members say they're skeptical of a new tax at the local level.

"I just don't trust (the system) anymore," said Heidi Heinrich, president of the Fairview Business Association.

During a special meeting of the Assembly's ad hoc committee on alcohol and substance abuse Friday to discuss the alcohol tax, Rosalie Nadeau, the chief executive officer at Akeela, a nonprofit that focuses on substance abuse treatment, said she had the same doubts as Heinrich.

"The (state) dime-a-drink law ... was sold as, 'We're going to address the alcohol problems,' " Nadeau told Assembly members. "(The money) really never materialized. It has stayed there."

Sullivan, who will be traveling to Juneau for two days next week, said that the question of how state alcohol tax money is spent will be "the subject of every meeting."

But the picture of state finances is bleak. On Thursday, Gov. Bill Walker laid out a proposal for deep spending cuts, which include slashing education and direct aid for local governments.

During Friday's meeting, Traini said the city had to look elsewhere for help.

"If we don't start taxing ourselves, we can't count on Juneau to take care of us," Traini said.

A table produced this week by Anchorage's treasury department showed estimates for how much money a local tax could generate based on retail sales taxes in the Fairbanks area and in Juneau. A five percent tax would generate between $9.2 million and $13 million, and an eight percent tax would generate between $14 million and $20 million, according to the table.

Traini hasn't suggested a specific rate for the tax but referred the question to three Assembly committees.

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