Mat-Su Assembly delays debate on sales tax proposal until May

What you need to know:

• The Mat-Su Assembly is set to discuss a proposal May 19 to replace the borough’s areawide property tax with a 6.5% sales tax, allowing time for state lawmakers to act on several proposed taxes.
• Proposed state measures include a statewide sales tax that varies by season, a 6% marijuana sales tax and a corporate income tax. If those pass, the local sales tax proposal will likely be shelved, according to Assembly member Michael Bowles, who introduced the measure.
• If approved for the ballot and passed by voters, the Mat-Su sales tax measure would replace the borough’s areawide property tax with a sales tax on most goods and services. Four other borough property taxes would remain in place.

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PALMER — Debate on a Mat-Su Assembly proposal that would ask voters whether to swap some of the borough’s property taxes for an areawide sales tax is delayed until May to allow time for state lawmakers to vote on a series of proposed sales and income tax measures.

If those measures are approved, the Mat-Su sales tax ballot proposal will likely be shelved, said Assembly member Michael Bowles, who introduced the measure. Bowles represents District 1, which includes Butte and Sutton.

The state proposals include a plan by Gov. Mike Dunleavy to institute a sales tax between 2% and 4%, depending on the season, and a 6% marijuana sales tax that would replace a fee currently paid by cultivators. A proposed corporate income tax would affect certain high-revenue entities.

“We want to watch what happens. We want the people, all of our fellow residents, to watch what happens,” Bowles said in an interview. “Because if all these taxes pass … [a Mat-Su sales tax] would actually probably be more detrimental to Mat-Su residents.”

Bowles introduced legislation for his plan March 3 and scheduled debate for a regular Assembly meeting May 19 instead of this week. 

If approved for the ballot, the proposal would ask voters whether to replace one of Mat-Su’s five types of property taxes with a 6.5% sales tax on most goods and services, including food purchases. It would be in addition to sales taxes already charged at stores within the city limits of Palmer, Houston and Wasilla and in Talkeetna.

If approved by voters, the sales tax would replace Mat-Su’s areawide property tax, which covers the cost of a wide variety of borough functions, including schools and road repairs. Last year that tax was set at $849 per $100,000 of assessed property value, or 8.485 mills.

The proposed sales tax would not replace Mat-Su’s nonareawide property tax or the property taxes for road service areas, fire service areas or special use districts.

Nonareawide property taxes are paid by all Mat-Su property owners who live outside the city limits of Wasilla, Houston or Palmer. Last year that rate was set at $37 per $100,000 of assessed property value, or about 0.371 mills.

Road service and fire service taxes are paid by most residents outside city limits and vary by region. Last year the average rate across Mat-Su was $290 per $100,000 of assessed property value, according to borough documents.

Special service area property taxes can be charged to residents in four specific locations in Mat-Su that receive unique support, such as flood control or sewer management.

locations are Port MacKenzie, Talkeetna, Chase Trail and an area on the Matanuska River in Butte. Those tax rates vary by location.

-- Contact Amy Bushatz at contact@matsusentinel.com