City still hazy about cigarette, tobacco tax revenue

Figuring out where revenue from a proposed citywide cigarette and tobacco tax increase would be spent is still a hazy issue after an Assembly work session on the issue Monday night.

The Committee of the Whole voted 8-to-1 in favor of a putting a tobacco tax increase proposition on the October general election, but opinions of the individual Assembly members varied on how the potential revenue should be spent. The proposition would ask voters to increase the city tax on a pack of cigarettes from 30 cents a pack to $1, and taxes on all other tobacco products from 12 percent to 45 percent. The ordinance must be approved at the regular Assembly meeting Monday night in order to be placed on the Oct. 6 general election ballot.

The majority of the discussion Monday revolved around the language of the ordinance, specifically the Assembly's intent on where to spend the funds from the tax increase. The present tax rate brought in $517,800 in revenue for the city in 2008. The new tax rate would bring the total revenue to about $1.69 million a year, or a $1.17 million increase if the Assembly OKs the ballot measure and voters approve it in October.

Assembly members Jonathan Anderson, Sara Chambers and Randy Wanamaker sat on a three-person subcommittee that looked at the draft ordinance language. The subcommittee took certain agencies, such as the Rainforest Recovery Center, out of the ordinance and replaced it with a more ambiguous language about where the money would be spent.

By law the Assembly can't say exactly where the revenue from the tax increase would be spent, Anderson said. The language of the ordinance is simply the intent of the Assembly and is not binding, he said. The subcommittee decided to say the money would be spent on "health and social service needs related to substance abuse and tobacco use, prevention and cessation."

"We simply wanted to say it was health and social service needs related to this," Anderson said. "We specifically decided not to name any particular agency or fund or anything else because we weren't saying it's definitely here, there or somewhere else."

Assembly member Merrill Sanford expressed support of the proposition only if the intent was to take the increase in tax revenue to offset present costs the city is already paying to deal with substance abuse issues in Juneau.

"If we're going to offset usage of taxes, I can do that," he said. "Otherwise I'm not going vote for tax increases no matter what it is and no matter how good it is."

Mayor Bruce Botelho said the ordinance language would allow the increased revenue to replace existing sales or property taxes currently used for substance abuse and tobacco programs, but wouldn't necessarily have to. Botelho said he is not committed to the same goals as Sanford, which include lowering sales or property taxes if the tobacco tax is increased.

"I think we all know that we are heading to difficult times over the next couple of years and I think this becomes part of the mix from my perspective," Botelho said.

Johan Dybdahl, the only Assembly member to vote against the ordinance Monday night, said he is against the proposition entirely and doesn't plan to vote in favor of the ordinance at next week's regular meeting.

"I just don't believe that we're going to modify behavior by taxation," he said.

Chambers said she also would like to see the tax be used to replace some of the city's costs associated with tobacco and substance abuse programs.

"What I would like to see is have a united body now so we can clearly articulate, in case there are any questions in the future, what we were thinking at this point," she said.

The regular meeting to vote on the ordinance begins at 7 p.m. Monday in the Assembly Chambers.

• Contact reporter Eric Morrison at 523-2269 or eric.morrison@juneauempire.com.