Mayor proposes alcohol tax for Anchorage homelessness and substance abuse treatment services

Anchorage Mayor Ethan Berkowitz wants to ask voters to enact a 5 percent retail sales tax on alcohol that he says could pay for homelessness and substance abuse services at a time of declining state support.

A local alcohol tax would generate a pool of money to pay for a range of public health and safety programs, including the clearing of illegal camps, housing, a substance abuse treatment center and an expanded Anchorage Safety Patrol, according to a memo to the Anchorage Assembly.

“The reality is, alcohol is an incredibly profitable business in this town,” Berkowitz said in a recent interview. “It’s a cost-causer that is not paying the cost.”

The Berkowitz administration is introducing the tax proposal to the Assembly next week. It needs eight Assembly votes to make the April 2019 ballot. A simple majority of voters would be needed to pass it, according to the text of the measure.

Three Assembly members -- Dick Traini, Eric Croft and Felix Rivera -- have signed on to co-sponsor the tax proposal.

An alcohol tax has been proposed seven other times to the Assembly since 1984. Traini was involved in three of those efforts, in 1994, 2015 and 2017. Citizens also pushed for ballot initiatives in 2004 and 2007.

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Not one of the Assembly measures has landed on the ballot, and citizen-led ballot initiatives have failed. In 2017, the alcohol industry launched an advertising campaign before the Assembly even took a vote. Industry leaders have argued that an alcohol tax would unfairly burden retailers and responsible drinkers for complex social problems associated with alcohol and other drugs.

At the state level, an alcohol tax did nothing to curb drinking, and state spending on substance abuse rehabilitation and prevention actually dropped, a 2013 Anchorage Daily News analysis found.

Berkowitz thinks a local tax will be different.

Unlike the state, the city can dedicate revenue, he said. He said the tax would raise between $11 million and $15 million, replacing state revenue that has diminished in recent years.

“There is a massive gap in the behavioral health system in this state, and this is a dramatic example of where the state has retreated,” Berkowitz said.

The tax would amount to $0.40 for a six-pack of beer, $0.50 for a $10 mixed drink and $1.75 for a $35 bottle of wine and $2.50 for a $50 bottle of liquor, the measure says. The Assembly could create exemptions.

According to Berkowitz’s memo, other uses for the tax money could include:

• Storage for personal property seized from illegal camps during clean-ups.

• The city’s “Mobile Intervention Team,” a team of social workers and a firefighter who triage homeless campers.

• Cold-weather housing and shelter.

• Construction of a potential “Alaska Center for Treatment,” or as a match for private investment.

In the past year, a group of neighbors who live near downtown Anchorage has become increasingly vocal at meetings demanding more be done about illegal camps, including more shelter beds and aggressive year-round cleanups. Some have said pointedly that they would be willing to pay a tax.

Berkowitz also suggested he would have stronger backing from the business community.

In the memo submitted to the Assembly, Berkowitz pointed to other communities -- including Utqiagvik (formerly known as Barrow), Juneau and Fairbanks -- that have approved sales taxes on alcohol. Anchorage already taxes marijuana, Berkowitz said.

A representative of the Alaska Cabaret, Hotel, Restaurant and Retailers Association -- a fierce opponent of recent alcohol tax measures in Anchorage -- did not immediately return a request for comment.

Berkowitz has proposed other tax measures since he took office in 2015. He’s had mixed success.

In early 2017, Berkowitz suggested a special election where voters could decide on a new sales tax to offset property taxes and pay for policing on the Seward Highway. That proposal died in the Assembly.

Later that year, the administration successfully pushed a 10-cent-per-gallon tax on gasoline and diesel fuel to offset property taxes. The gas tax took effect in late February.

Clarification: A previous version of the story was unclear about the number of times a tax proposal has reached a local ballot. While citizen initiatives have appeared on the ballot in the past, a measure proposed to the Anchorage Assembly never has. The story also misstated Assemblyman Dick Traini’s involvement in an earlier alcohol tax initiative. Traini was involved in alcohol tax proposals in the 1990s.