Pubdate: Wed, 13 Jan 2016
Source: Alaska Dispatch News (AK)
Copyright: 2016 Alaska Dispatch Publishing
Contact:  http://www.adn.com/
Details: http://www.mapinc.org/media/18
Note: Anchorage Daily News until July '14
Author: Devin Kelly

ANCHORAGE VOTERS TO CONSIDER MARIJUANA RETAIL SALES TAX IN APRIL

The Anchorage Assembly on Tuesday night approved a ballot measure 
that will ask voters in April whether marijuana retail sales should 
be taxed, starting at 5 percent.

The ballot measure would authorize the Assembly to increase the tax 
up to 12 percent without going back to voters again, but only once 
every two years and by a maximum of 2 percent each time. For the 
first three years, the revenue would fall outside the city tax cap.

After nearly an hour of debate, the Assembly voted 9-2 to approve the 
measure, with Patrick Flynn and Amy Demboski in opposition.

During the hearing, several industry representatives voiced concern 
about the structure of the tax and the city's assumptions about 
needing a tax to cover enforcement costs.

Bruce Schulte, who was representing the Alaska Marijuana Industry 
Association, told the Assembly the association would support a 5 
percent tax, but he called the prospect of future tax escalation a 
"new and troubling precedent." He also said there wasn't enough 
evidence to support arguments that the state would not have enough 
resources to regulate the industry, and that more Anchorage police 
officers would be required.

After the vote, however, Schulte and other industry members said they 
didn't expect an organized campaign against the ballot measure, at 
least at this point.

"I'm not excited about the prospect of having a 12 percent tax, 
because eventually that's what it's going to be," said Kim Kole, of 
the Coalition for Responsible Cannabis Legislation. "But I 
appreciated (Assembly members) who said they would only do it if 
there was justification."

A spreadsheet provided by the city treasurer in December projected 
average annual revenues of $1.3 million in the first full year with a 
5 percent tax, running from June 2016 to July 2017. If the Assembly 
chose to increase the tax to 9 percent after six years, the projected 
annual revenues would rise to $3.2 million, the document shows.

Assembly member Ernie Hall, who chairs the Assembly's committee on 
marijuana regulation and taxation, stressed that the 2 percent 
increase is not automatic, and would require public input and 
Assembly action. While he said he expected the tax would cover costs 
associated with regulating the local industry, he also said the tax 
would generate revenue for general government.

But some Assembly members, including Bill Starr, said they weren't 
comfortable with or didn't expect the city to collect the money for 
reasons other than covering local enforcement costs.

One other contention among Assembly members was whether the city 
should take more of a "wait and see" approach when it comes to taxing 
the nascent industry.

City budget director Lance Wilber said the city is estimating the 
cost of marijuana enforcement at between $1.5 million and $1.75 
million annually.

He said there are still "many variables and unknowns" about local 
costs associated with the new industry. He added: "Obviously we'll 
refine and revise the estimate as better information becomes available."

Flynn, at the start of the meeting, disclosed that he has been 
helping a former colleague develop a plan for a cannabis business. He 
said he had not yet invested money or signed contracts related to the 
venture, and Chairman Dick Traini ruled that Flynn did not have a 
conflict of interest in voting on the tax.

During the Assembly's debate, Flynn put forward an amendment to hold 
off on a vote until Nov. 15. He cited his involvement so far with the 
new industry, and argued that the city didn't understand the 
economics well enough yet to tax it.

But Hall and other Assembly members said they didn't think the city 
should be playing catch-up on taxation.

While voicing general support for a 5 percent sales tax, Schulte said 
his association would be lobbying vigorously against a proposed local 
license that would be issued in addition to a state license.

The Assembly also approved putting five bond propositions before 
voters in April, which include:

$36.6 million for roads and drainage, including $13.8 million for the 
second phase of Spenard Road reconstruction, from Hillcrest Drive to 
Benson Boulevard.

$3.4 million for parks, trails and recreational facilities.

$2.1 million to replace the roof at Anchorage police headquarters.

$900,000 for a new Anchorage fire engine.

$900,000 for four new ambulances.

The Assembly voted 9-2, however, to table a $49.3 million school bond 
until the meeting of Jan. 26, the last day the Assembly can add 
anything to the April 5 ballot. That meeting is also set to include a 
hearing on a ballot measure that would provide police protection in Girdwood.

Late Tuesday night, the Assembly voted 7-4 to reject a ballot measure 
proposed by Assembly member Bill Evans that targeted the city's tax 
cap calculation. In October, the Assembly changed the methodology for 
calculating the tax cap, setting the base for calculating next year's 
taxes as the amount levied in the previous year by the Assembly, as 
opposed to the amount collected in the current year.

The change meant the city could collect about $1 million more in 
taxes than it otherwise could. Evans sought to reverse the change, 
saying voters should have the chance to decide one way or another.

Assembly member Hall, who voted in the majority, said the issue of 
the tax cap calculation was too confusing to put before voters.

Evans' change may still appear on the ballot, however. A initiative 
application co-sponsored by former Mayor Dan Sullivan was filed last 
week with the city clerk's office, attempting to undo the Assembly's 
action last fall through a charter amendment.
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MAP posted-by: Jay Bergstrom