By Harriet Drummond

Alaska’s legislature is under great pressure to put a fiscal plan in place after dismal spring revenue projections show the state heading towards a $900 million deficit. A key part of any plan will have to include some sort of tax-based revenue. Currently, Alaskans pay no taxes to support their state government. There are some who believe that is how it should be. Most Alaskans, however, understand that paying nothing for state services is not normal.

Article X of the Alaska Constitution prescribes a unique system of local governments in Alaska. The authors of the Constitution are very clear that they want a new kind of local government to function in the vast, sparsely populated state. In the commentary attached to the various Convention drafts of Article X, the drafting committee chose the term “Borough,” from Black’s Law Dictionary, rather than “County” because “…counties carry a weak legal status in many states and there are undesirable connotations attached to that status.” 1

Article X, Section 1 also concerns itself with the duplication of taxing jurisdictions, and it reads: “…The purpose of this article is to provide for maximum local self-government with a minimum of local government units, and to prevent duplication of tax-levying jurisdictions. A liberal construction shall be given to the powers of local government units.”

The authors intended for local governments in Alaska to have a special relationship with their state government. When there is adjudication conflicting that assertion of local power by any interest (including the state), the courts shall “liberally construct” the balance of interests in favor of local jurisdictions. 

Local governments were viewed by the drafters of the constitution as taxing jurisdictions. Local service areas established by the local government could levy taxes to pay for those services (Section 5), the State may delegate taxing powers to a borough or a city (Section 2), and there shall not be an overlap of taxing jurisdictions (Section 1).

Again, the intent of the writers of the Constitution is to grant maximum authority to local governments in Alaska to the extent that the class or capacity under the charter of the local government permits. It is also clear that the purpose of local government is to provide local delivery of services authorized to be provided by the State under the constitution but only to the extent that the voters within the jurisdiction permitted pursuant to the Charter of that jurisdiction. Finally, the State will delegate taxing authority to the local jurisdiction consistent with its voter-approved charter. 

Article II, Section 19 conveys the special Article X relationship between the State and local government in the last sentence: “…Local acts necessitating appropriations by a political subdivision may not become effective unless approved by a majority of the qualified voters voting thereon in the subdivision affected.” The drafters of the constitution specify in that same section that even general laws passed by the legislature SHALL be tested in court whether a general act by the legislature is “duplication” of taxation: “…Whether a general act can be made applicable shall be subject to judicial determination.”

Over 100 Alaska jurisdictions have some form of local sales tax. These are taxes imposed under the Article X authority of the State Constitution. There are also dozens of local governments that do not have a sales tax who would not experience a jurisdictional conflict if the State legislature imposed a sales tax. 

For those local governments WITH a sales tax in place, the imposition of a statewide sales tax would create an unconstitutional conflict. Article X, Section 1 is clear that there shall be no jurisdictional duplications or conflicts of taxation permitted; Article II, Section 19 states that a general law that has the effect of forcing a local “appropriation” must be tested in court. The layering of a general statewide sales tax over the existing local tax regime of any authorized local government constitutes a “taking” from the local taxing authority by the state the incremental amount of local taxing capacity imposed by the state. The burden imposed by this appropriation of taxing capacity by the State of Alaska is in fact an unconstitutional jurisdictional conflict and should not be considered as a revenue option by the State of Alaska. 

Harriet Drummond served on the Anchorage School Board for nine years, the Anchorage Municipal Assembly for five years and in the Alaska State House for ten years.