Anchorage's Money Problem: Time to Rethink Old Laws?

The Problem

Anchorage is facing a significant financial challenge. The city needs more money to cover essential services like schools, roads, and safety. However, a law from 1961 prevents Anchorage from taxing personal income, restricting this power to the state level.

The Past vs. The Present

• Then: During the oil boom, the state provided substantial funding to Anchorage.
• Now: State support has dwindled, leaving Anchorage struggling to meet its financial needs.

The Sales Tax Debacle

Anchorage attempted to raise funds through a sales tax, but this approach faced criticism:

• Unfair Impact: Sales taxes disproportionately affect low-income individuals.
• Unequal Benefits: Tax breaks for property owners primarily benefited big businesses and out-of-state landlords.

A Temporary Solution

To address immediate needs, Anchorage used a special bond to fund education for a year. However, this is not a sustainable long-term solution.

A Potential Answer: Income Tax

• Precedent: Over 170 U.S. cities already tax income.
• Potential Revenue: Anchorage's total personal income was $23 billion in 2023. A modest 0.5% income tax could generate $122 million annually.

The Legal Hurdle

The 1961 state law remains a barrier. To empower Anchorage, the state must repeal this outdated legislation, allowing the city to make decisions that best serve its residents.