By WIN GRUENING
As Juneau property taxes and municipal wastewater fees continue to spiral upward, the City and Borough of Juneau Assembly wants to make it even more expensive to live there.
The Assembly recently approved a ballot proposition for the upcoming municipal election on October 7 that would implement a new seasonal sales tax rate of 3.0% October 1 through March 31 and 7.5% April 1 through September 30. The current municipal sales tax is 5.0% year-round.
Sales tax revenue collection is extremely seasonal in Juneau. The second and third quarters see significantly higher collections compared to the first and fourth quarters. This is driven by summer tourism, fishing, boating, and local spending during the peak visitor season.
The city ballot proposition is being presented as a way to offset revenue reductions from a citizen initiative on the same ballot that, if passed, would exempt groceries and essential utilities from sales taxes for individuals.
In reality, however, a seasonal sales tax likely would increase the tax burden for many Juneau families. Except for 1% which would remain temporary through 2028, it would also make the entire tax permanent – removing the option for voters to choose to renew it every five years.
Even if local residents evenly split their taxable purchases between the summer and winters months, their average sales tax rate would still increase from the current 5% to 5.25%.
However, when considering seasonal spending patterns, the majority of Juneau residents are likely to spend considerably more during the months April through September than during the fall and winter months.
During citizen testimony at the July 28 Assembly meeting, Affordable Juneau Coalition member Angela Rodell testified against the seasonal sales tax, calling it ill-timed and unaffordable for many residents who are already struggling with the rising cost of living, housing, food, childcare, and utilities.
The Assembly’s proposal doesn’t account for the increased spending by Mendenhall valley residents needing to prepare for annual flooding. Visqueen, lumber, sump pumps, duct tape, and other preparation costs as well as repairs and cleanup required for flood-related damage are significant.
Nor does it consider that 65% of residential home sales occur in the spring and summer months. Real estate commissions, appraisals, engineer’s reports, title fees, and other closing costs will be 2.5% more, driving the price of home ownership even higher.
Juneau homeowners spending dollars on yard and building maintenance each spring will pay the higher tax. This is when residents invest in home improvements, rent equipment, buy lawnmowers, fertilizer, potting soil, and plant flowers and trees to spruce up their properties.
According to Rain Coast Data, Juneau has about 5,900 registered boats and documented vessels – both recreational pleasure boats and commercial vessels. In the spring and summer, those local boat owners and charter operators repair and replace gear, buy ice chests and bait, and often encounter unexpected and expensive mechanical issues.
The summer months are when friends and family visit and residents spend more on meals in restaurants, on liquor, and available recreational opportunities.
Seniors who spend much of their fall and winter months south will definitely feel the pinch as almost all of their local spending will occur in the summer when they are in Juneau. Since they are already exempt from local sales tax on food and utilities, they won’t receive any additional benefit – but will pay 7.5% sales tax on everything else they buy.
Juneau city leaders won’t be talking about that though. Nor will they mention over-inflated reserve accounts, discretionary grants, outside consulting fees, and projects that voters either rejected, didn’t vote for, or aren’t clamoring for.
Their knee jerk reaction is always to raise taxes rather than take a hard look at where municipal tax dollars are going and how effectively they are being spent. This is the reason that a citizen-driven charter amendment is also on the ballot to cap Juneau’s property tax millage rate at 9 mills, slightly above where it was last year.
Juneau voters concerned about their community’s cost of living can make a difference by voting no on the seasonal sales tax, voting yes to exempt groceries and essential utilities, and saying yes to limit property tax increases by capping the millage rate.
After retiring as the senior vice president in charge of business banking for Key Bank in Alaska, Win Gruening became a regular opinion page columnist for the Juneau Empire. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is involved in various local and statewide organizations.
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They will always find a way to tax the residents of Juneau. I’ve noticed lately my cell phone bill and auto license tab renewals going up. A quick look at the invoices and I see Juneau taxes our cell phones and now has a large tax on our registration renewals which is through the state. I’m sure there’s more lurking out there, just haven’t found them yet.