Borough sales tax numbers better than expected

Aug 2, 2021

Credit Sabine Poux/KDLL

The Kenai Peninsula Borough is bringing in $5 million more in sales tax revenue than it forecasted in the early days of the pandemic, with an estimated $30.3 million coming in for fiscal year 2021.

The entirety of the borough’s 3 percent sales tax is dedicated to funding the school district.

The borough usually spends all its sales tax revenue, plus a chunk of its property tax revenue, on that contribution.

The Kenai Peninsula Borough and peninsula cities anticipated a large drop off in sales tax revenue when the pandemic first hit Alaska. And for some, like the tourism-dependent Seward, that’s largely held true.

The borough is bringing in less in sales tax than it did in fiscal year 2020, which was mostly pre-COVID. But the situation wasn’t as bad as anticipated. 

This year’s higher-than-expected return means the borough won’t have to put as much of its property tax toward its contribution to the district. Still, it’s not enough revenue to fully cover the borough’s expenses or close its deficit, said Finance Director Brandi Harbaugh.

Harbaugh said she thinks the higher numbers could be in part due to the new remote sales tax.

The borough started collecting remote sales tax right before the pandemic hit, in early 2020. Remote sales tax comes from business done out of state or online, like orders made through Amazon. Since March 2020, the remote sales tax revenues have been slowly increasing over time, she said.

Federal stimulus funds could also play a large role in getting people out shopping, Haurbaugh said.

She said even though the borough will be putting less property tax toward the education budget, mill rates were set in June and are not going to change.