Requiring nonprofits to charge sales tax will again get Assembly consideration

Original proposal modified due to concerns about impacts on essential services and intermittent fundraising events, but some officials say changes make it worse

People visit vendor booths at the inaugural Southeast Summerfest, hosted by the Juneau Arts and Humanities Council as a fundraiser, on Aug. 15, 2026. (Mark Sabbatini / Juneau Independent)

By Mark Sabbatini

Juneau Independent

A proposal requiring nonprofit organizations to charge sales tax for goods and services was approved by the Juneau Assembly’s Finance Committee on Wednesday after changes were made to address concerns about charging tax for essential social services and occasional activities such as bake sales.

But a number of concerns remain as the full Assembly is scheduled to allow public testimony and possibly cast a final vote on the proposal at its Sept. 14 meeting. Among them are unequal treatment for which nonprofits will be charged taxes and that many organizations may not be aware the modifications are being considered.

"I just want to clarify to everybody that we are not taxing the nonprofits, we're just asking them to collect sales tax," Mayor Beth Weldon said during the meeting.

The new requirement would take effect Jan. 1 if approved by the Assembly.

The proposed change is among several involving taxes the Assembly has pursued this year to make up for an ongoing budget deficit, as well as revenue expected to be lost after voters last year approved ballot measures to lower the property tax cap and exempt food and utilities from sales taxes.

Requiring nonprofits to charge sales tax would result in about $3.3 million in annual revenue, according to City Finance Director Angie Flick. The city collected about $67 million in sales tax during the past fiscal year that ended June 30, and the budget for the current fiscal year is roughly $545 million that includes about $140 million for municipal government functions.

The proposal was put on hold in July by the Assembly when concern was expressed by numerous nonprofit officials about anticipated administrative and financial difficulties if they were required to charge sales tax. Juneau Symphony Executive Director Charlotte Truitt told Assembly members at a July 27 meeting it would cost $2,000 to modify their bookkeeping process and $500 a month afterwards to charge customers the city’s 5% sales tax.

"We're fortunate that we have a bookkeeper who works about 10 hours a month," she said. "But many of the 263 nonprofits in Juneau don't have that luxury. They rely on volunteer treasurers or bookkeepers who donate their time because they believe in a mission."

The Finance Committee’s revisiting of the proposal on Wednesday included lengthy discussions about amendments exempting certain types of organizations, activities and transactions from the sales tax requirement.

An amendment introduced by Weldon and adopted unanimously specifies that an existing social services exemption in the proposed ordinance "means the provision of direct services to vulnerable, disadvantaged, or distressed individuals to meet basic life needs such as food assistance, housing assistance, disability support, day services, or senior and assisted living support."

To reduce the burden on small nonprofits, Assembly Member Neil Steininger proposed exempting such organizations from charging sales tax if their gross annual revenue is less than $300,000. The amendment failed by a 5-4 vote, with the objecting members stating it would result in an uneven treatment of nonprofits in a way that doesn’t apply to for-profit operators that charge sales taxes.

"From our perspective we need to see what's the difference between the people who are above $300,000 and below $300,000," said Assembly Member Alicia Hughes-Skandijs. "Is there a good reason there besides making it easier for them? We talked about burden and onerousness — we don't give those exemptions to businesses. We don't say, ‘Well, you're a pretty small business so you don't probably have the money for a full-time finance staff so you don't have to collect tax."

Steininger, Weldon, Paul Kelly and Greg Smith vote in favor of the amendment. Hughes-Skandijs, Christine Woll, Maureen Hall, Nano Brooks and Ella Adkison voted against.

A more nuanced amendment introduced by Hall and unanimously adopted applies the exemption to "intermittent fundraising events," which are definited as "any discrete campaign, gala, auction, bake sale, or temporary market drive conducted by a non-profit entity for the primary purpose of raising organizational funds, provided the physical selling window does not exceed 14 consecutive days and occurs no more than four times per calendar year." The Assembly, by an 8-1 vote with Hall dissenting, altered her original proposal that stated permanent retail establishments were not eligible for the exemption.

The final vote to send the proposed ordinance to the full Assembly for public comment and possible passage was 7-2, with Woll and Hughes-Skandijs opposed.

"This thing is rushed," Woll said just before the vote. "It's a mess. We're going to hear from lots of people who were or were not included in this, and how it affects them. And that's not how we should be setting policy. So I'm disappointed to see a bill with amendments move forward because I do think the original version we came up with was fair and made sense."

Steininger disagreed, stating new ways of generating revenue — including changes to the city’s tax policies — have been considered since last year’s election.

"We did a lot of work tonight, but that work is built on thinking about this issue for months, hearing from community members and getting emails for months, and I don't feel like this is rushed policy," he said.

Dissatisfaction with the revised policy after the vote was expressed by Sealaska Heritage Institute Chief Operating Officer Lee Kadinger, who said in an interview "I believe it further muddies the water over what is and what is not taxable."

"Our position is if we're going to tax nonprofits…it applies to everybody. period," he said. "It just applies across the board."

Kadinger said one of his specific concerns involving SHI is that charging tax will make it harder for Alaska Native craftspeople selling items to compete with imported art and other merchandise.

"I very much worry that by increasing the cost on authentic Native art by another 5% it's going to impact our artists who live here, who work here, their jobs are here, they're contributing to our economy," he said. "The money that's going overseas is not."

• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.