With tourism down, Municipality sees negative revenue variance

Attendees sit in the crowd of an Anchorage Assembly meeting held at the Loussac Library on July 14, 2020.
Attendees sit in the crowd of an Anchorage Assembly meeting held at the Loussac Library on July 14, 2020.(KTUU photo)
Published: Jul. 19, 2020 at 9:53 PM AKDT
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ANCHORAGE, Alaska (KTUU) - A drop in money from taxes related to the tourism industry in Anchorage has caused revenues to fall below what officials expected when the 2020 budget for Anchorage was written. Now, they’re looking at how they can fill that gap.

“Concerning the negative variant, the total is about 16 million,” said Assembly member Suzanne LaFrance. LaFrance represents serves as the chair of the Assembly’s Budget & Finance Committee

The majority of that 16 million comes from losses in the municipality's room and rental vehicles taxes, though the vehicle registration and fuel taxes saw drops as well.

“As you might imagine, that negative variance is coming largely from the fact that we’ve got fewer tourists and visitors to the municipality this year,” LaFrance said.

As for how to bridge the gap. Lafrance said they're looking to the CARES act for help, but that money comes with restrictions.

“There’s different kinds of specific grants, like for public safety, and Merrill Field is getting some CARES money, but not through that 156 million that the muni is getting directly, which cannot be used for revenue replacement,” LaFrance said.

She added the specific grant they're looking at now is for public safety.

“It will free up some general government funds that can be used for paying, for supplementing, or for filling that gap,” she said.

As for what this means for next year's budget. LaFrance said that's hard to say at this point. It's unclear what next Summer will look like, and there's new revenue streams to consider in 2021.

“We’ve got a convergence of different conversations about funds from the alcohol tax, and covid-19 relief money, or CARES act money,” she said. “And so that’s going to make for a potentially unique budget conversation.”

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