When you’re not sure how much money payday will bring, it’s best not to start adding new expenses.
The Assembly considered briefly ending sales taxes on grocery purchases for all its residents. That would have been well-intentioned but potentially costly mistake had it passed. Fortunately, six members of the Assembly knew it, too. The proposal failed 3-6.
Today begins the new Fiscal Year for the state and its municipalities, yet budget plans are anything but definite throughout Alaska. Gov. Bill Walker’s veto of $1.3 billion in budgeted items could mean an additional $3 million gap to Juneau. Or not, if the Legislature takes action on several bills when it reconvenes July 11. The problem is no one really knows how FY17 budgets will look, and we may not know for a few more weeks.
The proposal before the CBJ Assembly, brought up by Assemblywoman Maria Gladziszewski, would have asked voters if they wanted to eliminate the sales tax on groceries and instead increase the city’s general sales tax from 5 to 6 percent. The general sales tax increase would have been necessary to make up for the loss on grocery sales taxes, but only time could say if the increase of one tax would be enough to cover the loss of another.
And now isn’t the time to mess with sales taxes without assurances of the result.
For Alaska’s municipalities, revenue and expenses have become a moving target since oil prices bottomed out earlier this year.
Revenue from the state and federal government is changing, but not in a good way. The state is looking to pass on more costs to cities while keeping more revenue for its coffers. Revenue sharing by the state, for example, was cut in half this year. For Juneau that means almost $1 million in lost funding. For Alaska’s smaller cities, revenue sharing paid most of the bills. We should expect even more changes in future years. State cruise ship passenger fees shared with municipalities were on the chopping block this year, and likely will be again during the 2017 session.
Supporters of the proposal say taxing groceries is regressive and unfair to poor families. We fail to see how sharing the cost burden with all residents, including seniors who already receive a sales tax exemption on groceries, fixes this problem. There are services already available to aide the poor, and local food banks in town ready to lend a hand. Lowering taxes on the poor while increasing taxes on seniors is hardly progressive.
Until the city has a better handle on its budget projections, monkeying with Juneau’s tax structure poses as many dangers as solutions. The last thing our city needs to do is lower taxes for one group now just to impose new tax increases later should CBJ’s budget situation again change for the worse.
