Kenai Peninsula Borough Assembly members will consider a pair of ordinances on Tuesday that would tax tobacco products in the borough to help pay for a new child care facility grant program.
If passed, the proposed tobacco excise tax would apply to products like cigars, e-cigarettes and chewing tobacco. It wouldn’t go into effect until next year. The amount levied would be $0.05 per cigarette, or one dollar for a pack of 20 cigarettes, and 35% for wholesale tobacco products.
The borough’s finance department estimates the tax would bring in $4 million during its first year of implementation, and about $4.2 million each year after.
Money generated from the tax would be split four ways, with more than a third going toward capital projects at Kenai Peninsula Borough School District facilities. Another 30% would pay for the new child care grant program, which is being considered in a separate ordinance.
The rest would pay for other borough projects, and for a contribution to the Alaska Tobacco Quit Line, the state hotline for people who want to quit smoking. Any leftover money would go to the borough’s catchall general fund.
Assembly member Cindy Ecklund is one sponsor of the ordinances. She represents the eastern Kenai Peninsula, where a lack of childcare resources has strained the community.
Ecklund said she took a special interest in child care availability after Seward Elementary School’s preschool program shuttered three years ago. The program became ineligible for federal Title I money after failing to meet the minimum number of students eligible for free and reduced lunches.
“We wanted to do something a little different and more robust, and we wanted to definitely use part of those funds for child care,” Ecklund.
The proposed grant program would make money available for opening and running child care facilities in the borough, with the goal of encouraging economic development. The ordinance connects childcare availability to the strength of a region’s economy.
The program would establish separate grants for new and existing child care facilities, with award amounts ranging from $7,500 to over $20,000 depending on the facility type. A facility would be able to apply for the program if it’s licensed with the state, complies with the law and is physically located in the borough.
This isn’t the first time the borough has considered a tax on tobacco products — assembly members killed a similar initiative in 2018. Ecklund said she thinks this time will be different because the ordinance outlines how the money will be spent.
She envisions the new revenue source acting as a sort of relief valve for some of the borough’s other expenses. She pointed to large bond packages, specifically the more than $65 million school maintenance bond passed by peninsula voters in 2022, as one reason the borough should find new revenue sources to pay for ongoing capital needs.
Bonding projects allows the borough to borrow, and then pay back, money over a set period of time and requires voter approval.
Paying for those needs with a dedicated tax, she argues, means the borough won’t have to rely so much on other money. That, she said, is an argument against those concerned about implementing a new borough tax.
“It's going to be hard to argue that it's going to be more tax,” she said. “Eventually, it's going to level off.”
Why tobacco? Ecklund said it’s simple. Smoking is unhealthy. She’s concerned about rising tobacco use among young people, and said her mom and brother died due to health conditions caused by smoking.
If the tax works the way she hopes it will, the amount of money the borough gets will go down over time because less people will be smoking. The combined impacts of promoting a healthier lifestyle and creating a new revenue source for needed projects, she said, make the proposals a “win-win.”
“It's got a personal thing for me, but the main thing that I'm for this is for the benefits to our economy, to our families, and to our children,” Ecklund said.
Assembly President Brent Johnson has already signed onto both ordinances as a co-sponsor.
He said he has friends who smoke, but that a tobacco tax could discourage young people from picking up the habit. Johnson said the issue being legislated is not moral, and likened it to when the federal government required seat belts and airbags in cars.
“When I first read this, I thought, ‘Ah, I've got friends that smoke,’” Johnson said. “And you know, this is not a moral issue for me. And I don't want my friends to be mad at me. But in the end, the greater value is that, if we can just help make this a deterrent for young people to start using tobacco products, then it's worth all of the friends that hate me and it's worth whatever, because these are bad for people. Cancers and heart disease are serious business.”
He echoed Ecklund’s comments about the importance of having money available to pay for school maintenance. Using the borough finance department’s forecasted $4.2 million in annual revenue, Johnson said more than $1 million in new dollars would be available each year for school maintenance from the tobacco tax.
“We're way behind in this area,” he said. “That's why we did a bonding project here recently to do some school building maintenance. And so we need to get ahead of the game on that.”
If the tobacco tax passes, the borough would join several other municipalities in the state that have implemented similar taxes, including Anchorage, Fairbanks and the Matanuska-Susitna Borough. Ecklund said she drew inspiration in part from Anchorage, where the borough taxes marijuana sales and uses the revenue to support child care and early education initiatives.
If assembly members approve the ordinances for introduction Tuesday, a public hearing on both would be held during the assembly’s July 9 meeting.
Alaska’s Tobacco Quit Line can be accessed by calling 1-800-QUIT-NOW, by texting R-E-A-D-Y to 34191 or by visiting AlaskaQuitLine.com.
