I’d be remiss if I didn’t note the three municipalities considering joint resolutions opposing the HB3006 State Sales and Use Tax last week before any public discussion was held and everyone understood its consequences.
On Sept. 23, the Lobbying Executive Committee of mayors, managers and clerks from each of the three municipalities, along with lobbyist Ray Matiashowski, discussed House Bill 3006 presented by Rep. Geran Tarr on Aug. 30.
With civil servants overwhelmed with daily agendas, what did it cost taxpayers (salaries) to process this opposition resolution? It’s fortunate that all City Council and Assembly members postponed indefinitely the resolution.
Rep. Dan Ortiz has come out publically opposing state sales tax. By giving “the appearance” that District 36 is in favor of HB 3006 opposition, what message is sent to other cities to do likewise via their representative and again without consensus of citizens? Whatever incentive Rep. Ortiz and local leadership intended to imply this community’s opposition on one House bill over another before due process could be construed as manipulating the outcome. Mayors, managers, clerks and a state representative cannot brag “Ketchikan” is in favor of opposing taxation as they are held accountable to council, Assembly members and taxpayers who want more discussion.
HB 3006 State Sales and Use Tax 2% “An Act relating to a state sales and use tax; relating to sales and use taxes levied by municipalities; authorizing the Department of Revenue to enter into the Streamlined Sales and Use Tax Agreement; and providing for an effective date." Rep. Tarr’s presentation claims an estimate of $300 million could be collected by July 2022. First year potential sounds good to me — show us how!
Advantage of state sales tax — everyone (minus exemptions) who makes a purchase is taxed 2% at point of sale. A report on the Alaska Travel Industry Association website, “The Economic Impacts of Covid-19 on Alaska’s Visitor Industry 2019-2020,” lists 2,437,000 out-of-state visitors generated $41 million in 2019.
In addition to local 6.5% sales tax, 2% state sales tax has potential $4.7 million earnings. The Kechikan Gateway Borough’s latest investors — Ward Cove NCL partnership — and City of Saxman proposal complete with lodge and seaport partnership are subject to (only) 2.5% borough sales tax. Approving additional 2% state sales and use tax benefits their partnerships when lobbying state funding for infrastructure and DOT maintenance.
Anchorage, population 291,247, has no sales tax and could afford imposing 2% state sales and use tax. Anchorage, already a huge recipient of state funds/grants, leaves remaining 348 cities and villages who trust their payment into budget has a guaranteed “return” are subject to years of delays due to state budget deficits.
Two other tax initiatives are before the House: HB 9 Income Tax; PFD Payment/Credit, and HB 37 Income Tax; Permanent Fund; Earnings Reserve.
The framework of 1976 Alaska Permanent Fund (we-the-people) and Commercial Passenger Vessel Tax has merit; natural resources are supporting Alaska’s financial needs. A sales-income tax, after exemptions, is a Band-Aid to a much larger problem. We-the-people are still left with taxes that support visitors. Alaska’s cash cow is tourists. A proven fact as no cruise ownership is backing down on bringing less-than-capacity world class ships. The CPV $7 fee, paid by passengers, is shared with state, city and borough with cruise industry inserting their mandates on how it shall be spent on tourist-related projects.
If a statewide initiative approved by voters could set up a framework for an Alaska Impact Fee, using CPV example, a fee would be collected on every ticket sold entering in/out of a municipality. AIF broadens its collection with every cruise ship, aircraft and state ferry, as well as rental cars and interstate transportation: motorcoach and train. Exempt are air, land and sea independent charters traversing within port of call. The State of Alaska owns airports, ferry and highway systems. It is in its best interest to be an equal partner with AIF statewide initiative.
An Alaska Impact Fee provides municipalities with latitude when addressing special needs and upland projects. AIF revenues are reported by year’s end. It allows general budgets to approve projects and move forward on a timely basis. Currently, Ketchikan’s Wharfage Passenger Fee of $9 remains in Port Enterprise Fund; it was never shared with city budget.
Next step is seeking financial advisors to crunch earning potential of three options:
1) State sales and use tax; 2) Income tax; and 3) Alaska Impact Fee — letting communities begin discussion of benefits or not. Statewide this call to action will support the endeavor most likely to succeed. In my opinion, collecting a 2% sales tax and $9 impact fee will generate revenue for local and state budgets demographically throughout Alaska.
It is my recommendation that the new City of Ketchikan mayor and City Council place the budget on a special session agenda in early 2022 with sales or income tax verses the virtue of supporting an Alaska Impact Fee in a statewide initiative on November 2022 ballot.
Mary L. Stephenson is a resident of Ketchikan