Juneau residents might have to pay sales tax again on food and utilities, despite approving a local exemption during last fall’s municipal election.
That’s because Gov. Mike Dunleavy recently proposed a statewide sales tax as part of his fiscal plan meant to stabilize the state’s finances.
At a community town hall event Thursday evening, Juneau’s three state lawmakers weighed in on the governor’s plans and other topics at play this legislative session. Democratic Juneau Sen. Jesse Kiehl said the governor’s sales tax proposal, as written, would override Juneau’s local exemptions.
“The governor’s proposal would be to override that and to allow no variation,” he said. “I think that’s a bad choice, especially because it impacts people with a sales tax who struggle most to get by.”
Dunleavy’s proposed sales tax – Senate Bill 227– would follow a seasonal structure, set at 4% from April through September and 2% for the remainder of the year. That would be on top of Juneau’s existing 5% sales tax on most items. If passed, the state sales tax would expire in 2034 and provide between $735 million and $815 million of revenue to the state each year.
The governor’s proposal might sound familiar, because this past municipal election, the Juneau Assembly proposed implementing a similar seasonal sales tax at the local level to take advantage of the 1.7 million cruise passengers that come to town each summer. While voters shot that down, they did approve an exemption for essential food and residential utilities from local sales tax.
Kiehl said he thinks a moderate state income tax would be a fairer way to raise additional revenue for the state while not disproportionately affecting low-income residents. At the town hall meeting, Democratic Juneau Rep. Sara Hannan agreed. She said Alaska needs to stabilize its revenue with its expenditures.
“A state sales tax on top of local sales tax makes things really burdensome,” she said. “But right now, this is the first time we’ve been able to get the governor to use the word tax and not choke, so that’s a step forward.”
Some Alaska Senate leaders have said they’re skeptical the governor’s plans will pass the Senate this year. Leaders in the state House similarly said they’re not optimistic Dunleavy’s plans will pass this year, which is his last as governor. The House Finance Committee plans to hear public testimony on the tax proposal at 5:30 p.m. Thursday, Feb. 5.
KTOO’s Jamie Diep contributed to this report.
