Rogers presents to Juneau Chamber the status of food sales tax exemption

Finance Director Rogers during Chamber Luncheon (KINY / Kevin Allen.)

Juneau, Alaska (KINY) – The Juneau Assembly continues to explore the proposal to remove the sales tax on food, and Juneau’s Finance Director laid out the current options being discussed to cover the revune loss during the Chamber of Commerce’s Weekly Luncheon.

Finance Director Jeff Rogers spoke about the exemption of sales tax on food, which may be put to voters later this year.

Rogers pointed out that this is not the first time an assembly brought up the idea to exempt food, saying that they found records of conversations spanning about 20 years on how the city would exempt food from sales tax.

The definition of food, in this case, is SNAP-eligible food, Rogers said that’s essentially groceries.

He provided an example of hot versus cold crab.

“The Supplemental Nutrition Assistance Program, which is the federal definition of food, which we might think of as groceries or food unprepared food for home, sometimes those terms get used, but snap eligible food is where the assembly landed as the thing to exempt, and under the snap eligible guidelines, all of those decisions have been made but it remains; cold crabs, food and hot crab is not food. So if we exempted food from sales tax, you will pay sales tax on cold crab but not hot crab.”

Rogers said the current food tax exemption ordinance would make non-profits not exempt from paying tax on goods.

“There appears to be some level of consensus about changing and repealing the sale by nonprofits. So the ordinance that the city attorney has worked on for the assembly, for now, would remove that exemption only for goods and not for services. That might actually be a good middle ground,” he said. “Most of what nonprofits do is services, it’s actually relatively uncommon for nonprofits to sell goods, they provide services and they sell services. So just dealing with goods and not services, so leaving sales exempt, might be a middle ground.”

He said the sale of goods by nonprofits would provide a small amount of revenue.

So the assembly has two options to cover the 6 million loss; cut the budget to cover the food exemption, or raise revenue.

He went through some of the options weighed so far, raise the sales tax seasonally, or increase the mill rate.

“There is one fairly obvious alternative to doing anything on sales tax and you could exempt food, and you could make it up with property tax,nd so something on the order of one mil, 1.0 mil, makes up what we lose in exempting food so, so today, this year, current year, FY 22 the taxes you’ve already paid, were at a 10.56 mill rate and they are proposed to go back to what they have done for the last decade or so 10.66 in this year’s budget cycle. That’s a decision the assembly hasn’t made yet. The assembly could exempt food and set a mill rate of 11.56 or 11.66 and accomplish about the same end as it relates to municipal revenue.”

He added that, in his opinion, the assembly did not take the idea seriously when it was proposed.

As for the seasonal sales tax, the idea currently before the assembly is 5% in the winter and 6% during the summer.

“So for 12 months of the year, everybody in this room lives here for 12 months of the year, you will save 5% on your food bill, so everybody in the room saves 5% on your food bill but at the same time you spend 1% more on your summer nonfood bill, so you save 5% all year on food and you spend 1% more in the summer on everything but food.”

He said that the average Juneau household pays $455.56 a year in food taxes, and the total for non-foods is $2,885.11

Under the new structure with food tax-exempt and the sales tax put at 5% in the winter and 6% in the summer, the average household would pay $3,197.19 a year total in taxes for non-food items.

So then the total savings for an average household would equal $143.47.

Rogers stressed that the food tax exemption proposal is still a work in progress.

“None of this is a done deal. I think the assembly wants to hear from people who are impacted. We want better ideas. We want to know what the issues are,” he said. “So I think that we’re still in a generative phase on this.”