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We Build Alaska

Anchorage Assembly needs to carefully consider impacts of tax proposals

As the Anchorage Assembly considers new revenue options, we need to take our time and be clear about our objectives and how we plan to get there. I do not oppose an alcohol tax or a sales tax. I agree that we need to address the areas identified in both proposals, but I caution my colleagues as well as the public not to rush this process.

I do not want disappointed taxpayers because one, we either promised something we cannot deliver because $11-15 million a year in alcohol tax revenue is not enough or two, we are not clear enough about our intentions and goals. The current S-1 alcohol tax proposal says the funds will be dedicated to address three areas (1) public safety, (2) domestic violence, child abuse and sexual assault, and (3) behavioral health, substance misuse and homelessness. That’s a tall order for $11-15 million a year.

I also think we need to seriously consider the implications of what it means to take over areas of responsibility traditionally funded by the State. I agree that there are gaps and those gaps need addressing, but if we make that commitment, is that something the Municipality can do within projected alcohol tax revenues or should we consider a larger revenue generating vehicle?

Let’s look at the options for proposed spending keeping in mind any monies committed to personnel or a project will need to be funded year over year funding unless new funding sources beyond the alcohol tax are found or the services are discontinued. When we look at the proposed spending and contaminant year over year commitments that totals close a majority of the projected tax revenues.

For example, two of the ongoing funding areas are the additional police and criminal justice personnel proposed to be funded at $2.4 million by the alcohol tax. These will forever have to be funded with alcohol tax dollars unless those positions are cut in the future or another revenue source is found. Also, the costs of expanding the Anchorage Fire Department’s CORE team (mobile behavioral health and crisis intervention), which according to the Fire Chief is $1.7 million the first year, $2.8 million the second and third year, and then $2.9 million the fourth year and beyond.

By the fourth year just with public safety and the CORE team, $5.3 million of tax revenues will be committed and cannot be moved to other programs without cutting the police and criminal justice personnel added or reducing the CORE team. These numbers also assume no raises for the employees in these areas during that time, which is unrealistic as a majority of these employees are union contracted employees and their contracts will be renegotiated.

If we are successful in bringing on the Alaska Center for Treatment by the fourth year of the tax, we will need to add a cost of $2-3 million annually for operations. Adding this annual operations cost to the items discussed above will total $7-8.5 million a year. If we add in the homeless shelter funding as proposed at just over $2 million per year, then we are easily at $9 million or more per year in recurring expenses. On the low end of tax revenues collected that leaves only $1.5 million to put toward any prevention programs and we still haven’t even discussed what funding should go to the sponsors’ domestic violence, child abuse and sexual assault dedication area and the sponsors’ proposed funding for that area is $3.1 million. We also haven’t discussed any possible additional capital costs for a treatment center, crisis stabilization center or continued year over year funding of prevention programs.Very quickly the costs of what the sponsors hope to fund will exceed the projected revenues we hope to collect.

There are a lot of great ideas on the table and we should give serious consideration to what the real cost of addressing these issues will be for the Municipality, the most effective way we can do this work, and what those commitments will mean next year and into the future. We need to be honest with the public about what tackling these serious issues will cost and the time horizon for expected outcomes. I sincerely hope we get more time to talk with the public about revenue, our priorities and what we are hoping to achieve with any proposal before asking voters to decide at the ballot box.

Meg Zaletel represents Midtown Anchorage on the Anchorage Assembly. She was elected to her first term in 2019.

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