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Alaska cities and boroughs consider higher sales taxes to help pay for public services

By: James Brooks, Alaska Beacon

“I voted” stickers are seen on display in the headquarters offices of the Alaska Division of Elections in Juneau on Tuesday, Nov. 12, 2024. (Photo by James Brooks/Alaska Beacon)

Election day is around the corner for most of Alaska’s local governments, and many communities are considering whether to raise local sales taxes to pay for the escalating cost of public services, including basic infrastructure like road repairs and landfills.

Alaska’s largest city, Anchorage, holds its elections in the spring, as do Valdez and Cordova, but most of the state’s 150-plus municipal governments will have their elections in the next week.

In the state capital, Juneau, where voting has been underway by mail since late September, voters are considering three ballot measures with major implications for the City and Borough of Juneau budget.

Measure No. 1 would tighten the cap on local property taxes below current rates, effectively cutting city revenue by about $1 million and eliminating the city’s ability to raise rates. 

The second measure would exempt food and residential utilities from local sales taxes. That would eliminate between $10 million and $12 million per year from the city budget.

To compensate, there’s also Measure No. 3, which would raise the city’s sales tax from 5% to 7.5% in the summer and lower it to 3% in the winter. If that measure passes, it would roughly balance the lost money if Measure No. 2 passes.

If ballot measure No. 3 doesn’t pass, Juneau city officials expect to significantly cut local services in order to balance the budget.

Juneau is one of several communities deciding whether to pass sales tax hikes this month.

In Skagway, voters are considering a seasonal sales tax increase from 5% to 7% in the summer, with some of the proceeds earmarked for water, wastewater and garbage services in order to lower local rates.

In neighboring Haines, voters are deciding whether to raise the local sales tax from 5.5% to 7% in the summer within the Haines townsite, with a smaller increase in the rest of the borough. The sales tax would fall to 4.5% in the townsite during the winter, 3% in the rest of the borough, and groceries would be exempted.

In Ketchikan, borough residents are being asked whether they want to extend part of the local sales tax through 2032. The borough has a 2.5% sales tax, but half of a percent is dedicated to construction and renovation projects at local schools. That’s what voters will consider renewing.

Slightly north, in Petersburg, voters will decide whether to reduce a senior citizen sales tax exemption so it applies only to low-income residents. 

Ketchikan city voters consider seven ballot measures

While voters in the Ketchikan borough contemplate a sales tax measure, voters within the city of Ketchikan itself will also have seven other ballot propositions to consider.

First is a $15 million bond to pay for sewer mains and upgrades to the city’s water treatment facility. Those upgrades are being mandated by the state and federal governments. 

Voters in the First City also will decide six different amendments to the city charter. Proposition No. 2 would eliminate a 30-day waiting period for city ordinances to take effect. No. 3 would allow the city manager to live outside city limits, but only on the road system of Revillagigedo Island, where the city is located.

Proposition No. 4 would remove the requirement that voters approve the sale of any city property worth more than $30,000. Instead, the city council would have the authority to approve those sales.

The fifth proposition would allow the city to award large contracts to someone other than the lowest bidder, and the sixth would allow the city to approve sales or contracts with city employees and elected officials as long as there are at least three cost quotes and the chosen contract is “the most advantageous to the city.”

The last proposition, the seventh, would allow the city’s annual fiscal audit to take more than four months.

In addition to those ballot measures, three candidates are running for two seats on the Ketchikan City Council. There’s also a two-way race for borough mayor, two contested borough assembly races and two contested school board races.

Voters in Sitka will consider two ballot measuresThe first would allow the city to use proceeds from the local tobacco tax and the sale of the local hospital for parks and recreation. 

The second, if adopted, would require all ballot measures to include a comprehensive economic impact study report before reaching the signature-gathering phase. 

Six people are running for two seats on the Borough Assembly in Sitka, and there are three candidates for two seats on the local school board.

In Petersburg, two candidates are running for mayor and five candidates are running for two seats on the borough assembly. There is one candidate and two open seats for the school board. 

In Skagway, the one candidate for mayor is running uncontested, after the previous mayor resigned earlier this year. There are four candidates for two assembly seats, and one candidate for two open school board seats. In Haines, there are four candidates for two assembly seats, and two candidates for two school board seats. 

North Slope voters contemplate big borrowing plan

In the North Slope Borough, two of four assembly races are contested, and only one of four school board races is contested. Borough voters also will consider eight different bond proposals. That’s more ballot propositions than any other municipal election taking place this month in Alaska. 

The borough is proposing to borrow a combined $204 million for public facilities, including light, power, water, sewage, public safety, education and flood control.

At Utqiagvik, the borough’s largest town and the northernmost town in the United States, voters will choose between two candidates for mayor. There’s also two city council races, only one of which is contested.

Voters also are being asked to choose whether or not to extend Utqiagvik’s 20% wholesale tobacco tax to cover “alternative nicotine products and equipment,” such as vape and e-cigarette products. 

Within the Northwest Arctic Borough, there are four borough assembly seats on this year’s ballot. Only one race is contested, and one seat — covering Ambler, Kobuk and Shungnak — has no candidates at all.

Similarly, among three races for school board, none are contested and one of the three seats has no candidates.

In the Kotzebue city election, two seats on the city council are on the ballot, and each race has two candidates. Another seat was vacated by the resignation of Ruth Moto in September, and someone will be appointed to fill that seat after the election, with the replacement being up for election in October 2026. 

The Nome Nugget noted “meager interest to run for public office” in Nome this year, with two city council seats and two school board seats unopposed, but voters there will also be asked whether to raise the city’s sales tax from 5% to 6%. 

This week, the Nugget reported that if the tax increase doesn’t pass, city officials will cut services.

In the Matanuska-Susitna Borough, Houston considers sales tax hike

The Matanuska-Susitna Borough holds its elections in November (as does Metlakatla in Southeast), but the cities within the Mat-Su borough vote in October.

Wasilla has no ballot measures; its city election includes three city council races, only one of which is contested.

In Palmer, five people are competing to become the city mayor, the most competitive single municipal race this fall. Three people are competing for two three-year seats on the city council. There also is a one-year seat on the council, and two people are vying for it.

Palmer voters are also being asked if they want to change the city charter so the city manager is no longer required to live within the city. The change would allow the manager to live within five miles of city limits.

Within Houston, six people are running for three spots on the city council. Houston also has four ballot measures. One asks whether voters support a city-owned airport. A second asks voters to approve a 2% sales tax increase (from 2% to 4%) in order to pay for road repairs. The third and fourth measures ask voters to approve the “Matanuska Thunder Festival” and “Founder’s Day” as city holidays. 

Many ballot measures in the Kenai Peninsula Borough

Within the Kenai Peninsula Borough, voters will decide five different ballot propositions. The first would require elections officials to hand-count ballots and ban electronic tabulators. The Matanuska-Susitna Borough has already taken a similar move.

Proposition No. 2 would create a special taxing district in Ninilchik to fund a new local swimming pool there. No. 3, if approved, would increase the property tax exemption in the borough so the first $75,000 of a homeowner’s residence would be exempted from local property taxes. The current exemption applies to the first $50,000.

The fourth proposition would raise the borough’s sales tax cap every five years. Currently, sales taxes only apply to the first $500 of a purchase.

Proposition No. 5 would shift borough elections to November, aligning them with state and federal elections, much as the Mat-Su borough has done.

Five seats on the Kenai borough assembly are up for election, and three of the races are contested. Three school board seats are on the ballot as well, with two races contested.

Among city elections on the Kenai Peninsula, only Soldotna has a ballot measure. That proposition asks voters to approve or reject the annexation of 2.63 square miles of nearby land into the city limits. 

In the Interior, none of Fairbanks’ three local governments have ballot measures this year, but this year’s ballot will decide three seats on the borough assembly and two on the borough school board. There’s a two-person race to become Mayor of Fairbanks, and two seats on the city council are up for election. 

Southeast of Fairbanks, in North Pole, four seats on the city council are up for election. There are only four candidates, but the order of the candidates will determine who gets a three-year term, a two-year term or a one-year term.

Kodiak will pick a new mayor

In Kodiak, voters will pick between two candidates for borough mayor, five candidates for two seats on the borough assembly, and they will vote on a variety of service area boards.

Within city limits on Kodiak, four people are running to replace longtime Mayor Pat Branson, and four candidates are running for two seats on the city council.

In southwest Alaska, Bethel has four open city council seats but only three registered candidates and one write-in candidate

In Unalaska, Mayor Vince Tutiakoff Sr. is running unopposed for re-election, and three people are running for one of the two city council seats on the ballot. The other incumbent for city council is unopposed. On the local school board, three people are running for one of two school board seats; the other seat is held by the incumbent school board president, who is unopposed in his re-election bid.

Within the Aleutians East Borough, which includes Sand Point, King Cove and Cold Bay, two of three borough assembly seats have unopposed races, and the third has two candidates. All three school board seats on the ballot have candidates running unopposed.

Further north in Dillingham, two city council seats have two candidates apiece, and three people are running unopposed for three school board seats.

Within the Bristol Bay Borough, based in Naknek, three people are running for two seats on the borough assembly, and there are five candidates for the two school board seats on the ballot.

In the Lake and Peninsula Borough, two borough assembly members and two school board members are running unopposed. Those elections, like those in Juneau, are conducted by mail, and ballots must be postmarked by Oct. 7 and received by the borough clerk before Nov. 7.

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Health care takes big toll on cost of living in Alaska’s cities, report shows

By: Yereth Rosen, Alaska Beacon

Alaska’s three biggest cities have the highest health care costs among the nation’s urban areas, with costs that are about 50% higher than the U.S. urban average, a state analysis shows.

The findings, part of a broader analysis of Alaska’s cost of living that was released by the Alaska Department of Labor and Workforce Development, are the latest in a series of reports detailing Alaska’s extraordinarily high medical costs.

“It was not surprising at all,” said Sam Tappen, the state economist who did the analysis. His findings are in an article in the current issue of Alaska Economic Trends, the monthly magazine of the department’s research section.

Similar analysis has shown that Anchorage, Juneau and Fairbanks have held the top three spots for urban health costs in each of the past 15 years, he said.

Using available data, Tappen found that Fairbanks had health costs that were 51.5% higher in 2024 than the average among 254 U.S. cities and metro areas. Juneau was in second at 50.9% and Anchorage third at 47.5% above the urban average.

Medical costs in urban Alaska also rose more than the costs in almost all other sectors, Tappen’s analysis found. Medical costs increased by 7.8% in 2023, compared with an overall inflation rate in Alaska that was under 2% that year and just slightly above 2% in 2024, the analysis found.

Compared to the U.S. average, urban Alaskans also devote a higher percentage of their annual household spending to medical care – 12% in 2023, compared to a national average of 8%, the report said.

The findings, which did not extend to health costs in rural areas of the state, are consistent with past reports on medical costs in Alaska.

In 2016, for example, a consultant’s report prepared for insurer Premera Blue Cross found that payments to Alaska providers were 76% higher than the national average and that operating costs for hospitals outside of Anchorage were more than twice the national average.

Reports by the Institute of Social and Economic Research at the University of Alaska Anchorage have also documented steep increases in Alaska health care costs. One ISER report, issued in 2018, found that annual health care spending in Alaska increased from $1.5 billion in 1991 to $8.2 billion in 2014. A 2023 report by ISER, ranked Alaska second in per-capita health care spending, behind the District of Columbia, and said Alaska’s total health care spending had risen to $9.7 billion by 2019.

Beyond medical costs, Tappen’s analysis showed that Fairbanks had the highest utility costs among the 254 cities and urban areas in the analysis. Utility costs in Fairbanks in 2024 were more than twice the U.S. urban average, the analysis said.

The three Alaska cities also had among the highest U.S. urban grocery costs, with Juneau ranking second, Fairbanks third and Anchorage fourth. Honolulu had the highest average grocery costs of the 254 cities in the analysis.

Overall, the Alaska cities’ cost of living, though 21.5% to 27.2% higher than the national urban average, was not extraordinary in 2024, Tappen’s analysis found.

That is because housing costs in Alaska that once were among the nation’s highest have now been far surpassed by those in several cities elsewhere. “The U.S. housing market has just been a lot hotter than Alaska’s, and so they’re getting more expensive faster than us,” Tappen said.