Anchorage Assembly member Bill Evans wants to ask voters to amend the city charter to reverse a recent Assembly decision that allowed the city to collect more than $1 million this year in taxes than it otherwise could.
At the same time, the South Anchorage Assembly member says he is working on a referendum to create a sales tax aimed at offsetting property taxes, which make up the majority of the city's tax revenue. He says he hopes to introduce the proposal by the end of the month.
Evans' tax-cap proposal, to be introduced at next Tuesday's Assembly meeting, targets how the cap is calculated.
The tax cap is a limit on the annual increase of city taxes based on inflation, population growth, the amount of new construction added to the tax base and taxes collected the prior year. The Assembly voted 7-4 Oct. 27 to change the starting point for the calculation from the actual tax collected that year to the tax it could have collected had the budget gone to the limit set by the cap.
The size of the city's 2016 budget, proposed by Mayor Ethan Berkowitz and approved last week by the Assembly, depended on the October ordinance. The difference between what the city collected in taxes in 2015 and the maximum allowed under the tax cap was about $1.6 million, according to budget documents.
With the expanded taxing capacity, the city expects to levy $1.4 million more in taxes this year than would have been allowed under the old calculation.
Assembly Vice-chair Elvi Gray-Jackson proposed the change in September; a similar ordinance sponsored earlier this year by Assembly member Patrick Flynn passed 6-5 in May, but it was vetoed by then-Mayor Dan Sullivan.
Gray-Jackson and Flynn both said the change gives more flexibility in managing city finances amid declining state revenues. Evans and other critics say the shift amounts to a tax increase.
In his proposed ballot measure, Evans is seeking to amend the charter so the starting point is the amount the city actually collects in property taxes, not what could have been collected.
"Elvi's ordinance allows the city to make up for lost state revenues by increasing property taxes," Evans said in a Tuesday interview. "My proposed change prevents that."
A charter amendment has to be approved by voters and would be more difficult to change later than an ordinance passed only by the Assembly. In 2011, the Assembly narrowly rejected a charter amendment proposal similar to the one Evans is proposing.
Gray-Jackson said Tuesday that her ordinance did not guarantee a tax increase but gives the city the option, with less state revenue sharing money, of asking residents to pay more in taxes for added services like police protection.
Eight Assembly votes are required to put Evans' proposal on the ballot. A public hearing before the Assembly is set for the Dec. 22 meeting.
Sales tax proposal in the works
Evans is also working on a proposal for an Anchorage sales tax. At the previous Assembly meeting on Nov. 24, Evans said he would introduce it Dec. 8, but he said Tuesday the economic analysis portion of the ordinance is proving more complicated than he thought. He said he's now hoping to introduce it by the Dec. 22 meeting.
Evans said the tax rate in his proposal will likely be between 3 percent and 4 percent.
Anchorage sales tax proposals have historically gone down in flames at the ballot box even when tied to property tax relief. The most recent one, a 3 percent sales tax proposed in 2006, was rejected with 70 percent of voters opposed. In 2001, a 2 percent sales tax was defeated with 71 percent opposed.
Evans said he'd like to see the city's tax base diversified beyond property taxes and that he thinks there's growing support for a sales tax.
"I think we won't know until we really give it a test on the ballot," Evans said. "Even if not, I think it's periodically a good idea to let people decide if the current tax system is what they want."
Alaska Dispatch Publishing