'Sin' tax newest option to square borough finances

Jun 7, 2018

The borough assembly adopted the FY 19 budget this week, but a funding gap remains.

The borough assembly adopted the fiscal year 2019 budget after making a few changes to Mayor Charlie Pierce’s original proposal, which had totaled about $81 million.

 

 


 

By a vote of 5-4, education funding got a roughly $650,000 bump to just over $50 million total. Assembly member Hal Smalley sponsored that amendment, which puts education funding at the cap, just not for the coming year.

“I don’t know if there is a new cap based on the new funding (formula)...The reason I support this is, number one, I think it’s an investment in our future. But secondly, in discussions with our local delegation from Juneau, they said ‘Hal, we worked together, we came up with as much as we could, we got you as close as we could. We would like for you to go the rest of the way.’ And that’s what I did.”

 

How to pay for that, without dipping further into the borough’s fund balance, is a matter that will be left for another day.

 

The assembly did approve a slight increase in property taxes, which will go from 4.5 to 4.7 and put about $1.6 million toward the borough’s $4 million deficit. Bed taxes and sales taxes have been debated for months as a means of bridging the gap. A new idea, though, seems to be picking up steam. Excise taxes on tobacco, alcohol and cannabis Mayor Pierce recently introduced. He calls it a sin tax.

“It will address many of our problems. It does not require going on the ballot. And it raises enough revenue to cover all of the ideas we’ve talked about.”

Taxing cigarettes alone is estimated to bring in at least $5 million, but there are plenty of questions as to just how that tax can be collected and for what purpose. Assembly member Kelly Cooper supports the idea, but has a few concerns.

“Have we vetted this enough? Through legal and through finance and through estimates on the items we currently are getting tax on? Because he we are at the 11th hour, and that isn’t a fault of the assembly or the administration. We’ve been working on this for a really long time. I’m kind of exhausted. I think we’ve beat this horse ‘til it’s dead. But at the same time, have we done enough where we can flip that switch, if it’s passed by the assembly, it can go?”

Other areas of the state have levied similar taxes, but the borough administration will have to work out the legal details before a vote can take place. With that on the table, other tax proposals are up in the air and the sales tax increase that would have been on the fall ballot was voted down. The assembly will likely hold a hearing on the so-called sin tax at its next meeting June 19th.