Andrew Demma at Dos Manos Gallery in Anchorage
Behind the counter of Anchorage’s Dos Manos Gallery, co-owner Stephanie Johnson expressed a sense of achievement as the establishment edges closer to its 20th anniversary. Yet, this milestone comes with a series of concerns.
After an extended period of growth, Johnson observed a notable downturn in sales during the 2024 holiday season. By the conclusion of 2025, sales figures had dipped by 12%.
She noted that many customers were increasingly inclined to make judicious purchases, often returning multiple times before finalizing their gift selections. Consequently, lower-priced items experienced a quicker turnover.
Johnson apprehensively anticipates that Mayor Suzanne LaFrance’s proposed 3% sales tax may adversely impact business in the short term. As consumers grow wary of discretionary spending, the proposed tax could further constrain their choices
Amid broader discussions regarding declining affordability in Anchorage, other entrepreneurs share concerns that cumulative costs may deter residents from dining out or patronizing local establishments, several of which grapple with their own rising expenses.
“People tend to first cut non-essential expenditures,” Johnson remarked. “Though I believe beauty is essential, we do not offer necessities.”
The sales tax proposal, unveiled by LaFrance in November, has been underscored as timely. With a decade-long trend of dwindling state funding, the mayor has presented Anchorage residents with two stark choices as the municipality’s financial outlook becomes increasingly precarious: seek new revenue streams or reduce public services.
The Assembly is poised to deliberate on the sales tax proposal following a continuing public hearing set for Tuesday. Approval by the Assembly would be a prerequisite for the measure to appear on the April ballot for voter consideration.
[What is the Anchorage sales tax proposal? And is it likely to head to voters?]
A summary of economic effects shared with the Anchorage Assembly examined how households, contingent upon their income brackets, are expected to absorb a sales tax. However, data regarding the potential repercussions of such a tax on local businesses and their patrons is markedly sparse.
This is a realm more challenging to quantify, stated Ian Mills, a research and data manager at the University of Alaska Center for Economic Development.
The center previously scrutinized a similar sales tax initiative that ultimately failed to garner Assembly votes and access the ballot last year.
The implications of LaFrance’s proposal are contingent on consumer purchasing patterns and the specifics of tax exemptions, which remain nebulous at this juncture.
Revelations regarding the current economic state of Anchorage’s business milieu can be gleaned from the findings of a “Quick Pulse” survey initiated by the Alaska Small Business Development Center at the dawn of 2025.
Unlike the previous year, where the focus was on “growth and efficiency,” businesses are now primarily preoccupied with managing escalating costs prompted by a climate of political uncertainty.
Previously, the specter of political instability—stemming from tariffs and market volatility—had not infiltrated the survey’s top ten barriers to business, the report indicated. This uncertainty has instigated significant trepidations among entrepreneurs concerning the necessity of price increases to remain viable.
The Anchorage Chamber of Commerce surveyed its members regarding the sales tax proposal late last year but has not yet disclosed the results publicly. The Anchorage Chamber chose not to comment on this matter.
Assembly member Daniel Volland, who represents downtown, observed a lack of feedback from local businesses within his jurisdiction. This marks a stark contrast to the previous year’s community-driven sales tax discussions, where there was considerable support from the downtown business circle.
“That enthusiasm appears to have diminished,” he remarked, expressing concern over the outreach efforts surrounding the mayor’s revised proposal.
Economic Strain Intensifies
Despite a prevailing “general sense of concern or trepidation” among Dos Manos patrons about expenditure, Johnson perceives potential advantages of a sales tax.
The anticipated $176 million revenue from the sales tax could be allocated to ameliorating a burgeoning infrastructure deficit, providing property tax relief, and facilitating the development of affordable housing and childcare.
“I am reluctant to watch our vibrant, younger demographics migrate to other cities that offer better opportunities,” she articulated.
“While I cannot definitively state the impact the sales tax will have, neglecting to invest in our community seems counterproductive in the long run.”
However, not all entrepreneurs concur that a sales tax would ultimately enhance the business landscape in Anchorage. James Strong, proprietor of the grab-and-go eatery Sweet Caribou, has been incrementally increasing prices on an annual basis to offset wage hikes and mandatory paid leave regulations.
“Our lunch bowls and sandwiches are currently set at $17,” he stated, foreseeing further price adjustments this year to contend with inflationary pressures.
“Rising operational costs are reaching a point where dining out is becoming prohibitively expensive, particularly in the food service sector,” he lamented.
This inflationary trend has not only modified the clientele’s ability to dine at his establishment but has also impacted his employees’ take-home pay. As a significant portion of his staff’s earnings is derived from tips, he anticipates customers will react to a sales tax by reducing gratuities.
Public sentiment surrounding LaFrance’s proposal remains divided. West Anchorage resident Riley Creed opposes the tax, viewing it as an additional strain on “Alaskans who are already financially stretched.” Should it pass, she foresees her family radically curtailing recreational outings and discretionary spending.
Conversely, Muldoon resident Shawn O’Donnell believes that, due to the exemptions for most essentials embedded within the proposal, it imposes no significant financial burden.
The current proposal includes exemptions for core items such as groceries, rent, mortgage, gasoline, utilities, and healthcare services.
Erin Baldwin Day, an Anchorage Assembly member representing Midtown, indicated that constituents have voiced that inflation and rising prices render the sales tax an additional pressure.
Yet, many concede that having available revenue for reinvestment in Anchorage justifies the additional 3% charge.
“There is a prevailing sentiment that Anchorage must invest in its future to sustain its attractiveness as a viable business hub,” she remarked.
The Assembly is scheduled to convene at 5 p.m. on Tuesday at the Loussac Library.
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