News from Patrick Flynn



Reviewing revenues

Last week the mayor unveiled his proposed 2011 city budget.  Since then I’ve been both conducting more in-depth review (though some of the details, like various fee increases, appear to be in flux) and mulling over some of the various revenue proposals that could provide property tax relief.  Here are a few of those ideas:

  • Increasing the city’s tobacco tax (read more here), estimated to generate between $5.2 and $6.2 million annually.
  • Revisiting the idea of a sales tax (read more here).  Implementation would require both Assembly approval and an affirmative vote of 60% in the April election.
  • There’s also some talk of a different broad-based mechanism, like the gross receipts tax briefly mentioned in this 2007 article, which would require Assembly but not voter approval.  When this was last discussed proponents liked its “exportability” (meaning a portion of the revenue would come from those outside the city) while opponents were concerned about effects on lower-margin businesses.  (Other pluses and minuses were raised as well.)

In each case the idea is to offset taxes currently paid by property owners; the tax cap would stay in place so overall taxation would remain stable.  As the Assembly deliberates on the mayor’s budget I expect revenue discussions to continue in the background and I’m curious what you think about the options I’ve mentioned, or other suggestions you might have.  Please take a moment to participate in my poll (I know, I haven’t conducted one of these in a while) or leave a comment with your ideas.

Regards,

Patrick

This contribution was made on Thursday, 07. October 2010 at 12:15 and was published under the category Fiscal matters. You can follow comments on this entry through the RSS-Feed.

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6 Comments

  1. […] This post was mentioned on Twitter by Anchorage Library, NECC. NECC said: Flynn says: Reviewing revenues: Last week the mayor unveiled his proposed 2011 city budget.  Since then I’ve been … http://bit.ly/dtPzr5 […]

    Pingback: Tweets that mention News from Assemblyman Patrick Flynn » Reviewing revenues | An Assembly member's take on Anchorage issues -- Topsy.com – 07. October 2010 @ 2:53 pm

  2. Patrick,

    When I attended one of the Mayor’s public budget meetings in August, there was much discussion and a considerable amount of support for an alcohol tax. Can you tell me why that isn’t on the table and a tobacco tax is? Also, do you know the tax burden on each one of those things? That is, how much do we already tax tobacco vs how much we already tax alcohol?

    Thanks,
    Erika McConnell

    Comment: Erika McConnell – 07. October 2010 @ 4:08 pm

  3. Erika,

    Great questions! First off, if I recall my history correctly, part of the reason we have a 60% threshold for sales taxes stems from a voter-initiative effort in the 1994 to establish an alcohol-specific sales tax. (There may have been an earlier version in 1992, but I couldn’t find the information.) After narrowly defeating the 1994 initiative opponents developed the 1997 charter amendment on any sales tax which effectively took an alcohol-specific sales tax off the table.

    As to the current tax burdens, the city currently taxes cigarettes at the rate of $1.46/pack. I’m not aware of any alcohol-specific municipal tax so those taxes are state & federal. The last increase in state alcohol taxes occurred in 2002.

    Regards,

    Patrick

    Comment: Patrick Flynn – 07. October 2010 @ 5:17 pm

  4. Patrick,

    Thanks for your response–dredging up some of those old election returns is especially impressive! As a follow-up, can you explain why we can tax tobacco sales without voter approval when we can’t tax alcohol sales without voter approval? Or is it that the voters approved a tobacco tax at some point and it can be raised (or lowered) without additional voter approval?

    Thanks,
    Erika

    Comment: Erika McConnell – 11. October 2010 @ 1:18 pm

  5. Mr. Flynn,

    I have not had time to follow Assembly activities recently, but it certainly looks like you have some interesting measures in the works.

    I would suggest seeing what voters think of taxing alcoholic beverages by class; in particular, wine is a poor source of tax revenues since wine consumers tend to base consumption roughly in proportion with prices.

    Beer is a more stable source of revenue. There exists some evidence that cigarette taxes reduce beer consumption along with cigarette consumption, but it is well known that the taxes affect aggregate beer consumption by only small proportions. While alcohol taxes are not a strong solution to Anchorage’s chronic inebriate problem, it is noteworthy that consumption taxes have a greater effect among minors than other demographics.

    While somewhat less stable a revenue source than beer, liquor also has low elasticity of demand, and liquor taxes for offsetting property taxes may be more popular than taxes on beer.

    Comment: Geoffrey G. Humphreys – 14. October 2010 @ 11:35 pm

  6. The short answer to Erika’s question is that the tobacco tax is an excise tax and the alcohol tax would be a sales tax. An excise tax does not require a 60% vote.

    Comment: Kimberly – 28. October 2010 @ 5:44 pm

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