Petersburg voters to decide on sales tax cap increase in October

The Petersburg Borough Assembly voted 6-1 on Monday to place a measure on the October 6, 2026 ballot that would raise the single-purchase sales tax cap from $1,200 to $5,000.

Ordinance 2026-10 passed first reading at the May 18 assembly meeting. It will advance to a public hearing and second reading on June 1. If voters approve the increase, the maximum sales tax on a single transaction would rise from $72 to $300. The cap has changed only once since 1959.

The proposed $5,000 cap would still be the lowest in Southeast Alaska. Wrangell's cap is $5,000, Juneau's is $15,000, and Sitka's is $12,000. Petersburg's sales tax rate is 6 percent.

Finance Director Jody Tow said about $25 million in sales is exempted annually under the current cap. Raising the cap would capture more visitor spending during tourism season, she said.

Assembly Vice Mayor Stanton Gregor, who requested the ordinance, said the increase would help fund essential borough services, including the Petersburg School District, while still remaining the lowest tax cap in Southeast Alaska.

"We are increasingly becoming a visitor-focused economy, which is great," Gregor said. "Leaving uncaptured dollars, especially from our out-of-town and out-of-state visitors on the table, seems like low-hanging fruit we should grab onto."

Assembly Member Valentine said the cap is comparable to Wrangell's and noted that Petersburg's cap is 20 years older than he is.

"I think at this point, getting to $5,000, probably just staying there is probably a good idea," Valentine said. "If we raise it to 1,000, you know, 3,000, probably in another year or two we'll ask again."

Assembly Member Tony Newman cast the sole dissenting vote. Newman asked how many times the measure had come before voters and failed. Tow said it failed by about five votes two years ago and may have been on the ballot about 10 years ago, though she would need to confirm.

Two years ago, Wrangell still had a $3,000 cap. After Petersburg's measure failed, Wrangell's assembly approved raising its cap to $5,000 without a public vote, Tow said. Wrangell also has a 7 percent sales tax, compared to Petersburg's 6 percent.

Assembly Member Matt Schwartz said the increase would affect local businesses as well as visitors. He said he recently ordered $80,000 worth of engines from Napa and noted that local businesses will generate more revenue from the increase than tourists.