The Mat-Su Borough is debating its third proposal of a sales tax. However, this time, the goal is to offset property tax increases, which are expected to rise due to Alaska’s budget gridlock.
The current 2% sales tax proposal will go before votes in November under legislation supported by Mat-Su Assembly member Jim Sykes. The tax will apply to services, rentals, and sales. The bill was amended by other members of the assembly to include dropping property taxes to match tax revenue, and to eliminate all but legally required exemptions.
The proposal is largely due to Alaska growing fiscal uncertainty. Thus, the Mat-Su local government thinks it’s prudent to diversify their tax sources.
Any tax revenue generated through this new sales tax would just offset property taxes, not increase the overall revenue of the borough.
Alaska’s operating budget matter still remains unresolved after Gov. Dunleavy’s $444 million’s worth of budget vetoes, and the debate over the Permanent Fund Dividend. Alaska’s House proposed a bill which would reverse the vetoes and pay a $1600 dividend, while Gov. Dunleavy remains steadfast in his support of a full $3000 payout.
However, public support for the sales tax is lackluster at best. During the last hearing, no single member of the public came out in support of a sales tax.
Critics claims the proposal is poorly timed, considering the budget gridlock. Many also do not trust the government to lower the property taxes, calling the proposal a sham to justify a sales tax.
The mayors of Houston and Wasilla expressed disapproval, due to their experience with sales taxes in their own jurisdictions.
The assembly tabled a sales tax proposal in 2017, and voters harshly rejected a 2009 proposal for the same thing.