Mat-Su assembly to consider switch of property taxes for a borough sales tax

Matanuska Susitna Borough voters could switch their property taxes for a borough sales tax under a proposal introduced at the March 3 borough assembly by assembly member Mike Bowles. The proposal, in OR-26-032, would establish a 6.5% areawide sales tax while also repealing the borough’s current property tax mill rate.

The tax would apply only to the first $1,000 of a sales transaction, and would include sales, services and rentals in the borough. If adopted by the assembly the sales tax would appear on the ballot on the borough’s Nov. 3, 2026 election. A public hearing on the proposal has been set for the May 19 borough assembly meeting.

In introducing the measure Bowles argued that Mat-Su’s current system of taxation, “places an overwhelming burden of taxes on real property rather than spreading the burden evenly. The intent of this ordinance is to capture a wider tax revenue source rather than continue placing the overwhelming burden of taxes on those who own real property,” he said in a statement filed with the introduction.

“This shift will lower the tax burden for all borough residents while capturing transient activity such as tourism, hospitality and entertainment,” the statement said.

The sales tax would be on top of existing city sales taxes in the borough. Palmer now has a 3% sales tax that will become 4% this summer with the addition of a special 1% one-year seasonal tax that intended to raise funds for construction of a new public library. Wasilla has a 2.5% sales tax; Houston has a 2% tax and Talkeetna a 3% tax. Bowles said a 6.5% borough sales tax would fund the majority of Mat-Su’s areawide budget obligations.

The proposed new borough tax is estimated to raise $118.5 million in new revenue at a 6.5% rate. This would not quite cover the $125.5 million that will be raised under the FY 2026 areawide property tax, but increasing the tax to 7% would replace the property tax Income, the borough’s finance department has estimated.