Where Does the City Get its Revenue?

Revenues

The primary source of revenue that pay for the operating budget is property taxes.  The revenue categories are:

• Property taxes
• Non-property taxes (i.e. tobacco tax)
• Interest on earnings and other earnings
• Program-generated fees, fines
• Federal revenue
• State revenue

2011 Revenue Sources

Property Taxes

Property taxes are the major source of revenue that pays for city services.  The Tax Cap, approved by voters in 1983, sets the maximum amount that can be collected each year.  This category includes taxes assessed on the value of real and personal property.

Automobile Registration Taxes

This tax is collected by the State of Alaska when Anchorage residents register their vehicle; amount is based on the vehicle’s class and year.  A recent trend is that vehicle owners are keeping their automobiles longer, thus the Municipality is realizing less in revenue from this tax.

Tobacco Taxes

The tax on cigarettes was 72.6 mills in 2010 and is adjusted annually based on the Anchorage CPI.  The tax on tobacco products is 15% of the wholesale price.

Aircraft Registration Tax

The tax is $75 per year for a single engineer aircraft, hot air balloon, and glider.  It is $125 for aircraft with two or more engines.

Motor Vehicle Rental Tax

The 8% tax is levied on retail rental of motor vehicles.

Room Tax

The tax is 12%, of which approximately 4% pays for the debt incurred to construct the Dena'ina Civic and Convention Center; approximately 4% for tourism promotion, which is a contract with the Anchorage Convention and Visitors Bureau, and approximately 4% to general government.  (The room tax is the only tax that does not fall under the Tax Cap).

Interest Earnings

This includes investment earnings on the Municipality’s cash and investments and payments by utilities and enterprises. 

One source of investment earnings is the MOA Trust Fund, that was created when the Municipality sold its telephone utility.  In April 2002, voters approved converting it into an endowment, which changed the calculation of the annual dividend amount paid to general government.  Since 2004, it was based on a 5% payout formula, which allowed for a $6.4 million payment n in 2009.  Because of the stock market collapse in 2008, the Assembly determined the 2010 dividend should be 4%, resulting in a $5 million payment in 2010.

Program-Generated Fees and Fines

This category of revenue achieves a policy goal of more closely associating cost-causer with cost-payer. Fees and fines in this category range from building and electrical permits, library book fines, reimbursement from the State to maintain traffic signals, parking enforcement fines, to court fines.  It also includes garnishment of Permanent Fund Dividends for debts owed to the Municipality.

Federal Revenue

This category primarily includes operational assistance received from the Federal Government.  Other revenue in this category includes Payment in Lieu of Taxes from Federal governments, which compensate the Municipality for non-taxable land located within Anchorage’s boundaries.

State Revenue

This category is State of Alaska revenue sharing which is determined based on a formula approved by the State Legislature.

Intra-governmental Charges (IGCs)

These are charges for services provided by one Municipal organization to another. For example, the Maintenance and Operations Department maintains all general government buildings. Maintenance costs are budgeted in Maintenance and Operations and charged out to the appropriate users. By using an intra-governmental charge system, the full cost of a program—including overhead—is associated to a program. This system also allows general government departments/agencies to properly charge Municipal utilities, grants, and capital projects for services provided.