News from Patrick Flynn

Budgets & bonds

The Assembly’s agenda for Tuesday, December 6, is both light and heavy.  The former because it includes the municipality’s 2012 budget and the school district’s proposed bond, the latter because there appears to be general consensus surrounding both.  General, of course, does not mean universal.

Starting with the budget, there are 11 proposed amendments affecting Parks & Recreation, bus service, libraries, sidewalks, the police department, demographic research, the Ombudsman’s office, the museum and the Performing Arts Center.  None are greater than $150k – most are far less – so even if every single one were adopted (which I doubt) the tax implication would be minimal.  But that raises an interesting point.

Part of the discussion around amendments will involve fund sources – how, exactly, will proposed amendments be funded?  Expect to see some Assembly members argue, somewhat correctly, “fund balance” (also known as surplus) is the source.  Others will claim the true source is property taxes.  Both are correct, technically, which means both are also incorrect.  To explain this dichotomy it is necessary to understand two things.

  • First, any surplus revenues from 2011 automatically roll to reserve funds (fund balance) and the expectation is that said surplus funds will push those fund balances above the upper limit.  Think of them as surplus-surplus funds.
  • Second, in circumstances like this, these so-called surplus-surplus funds are applied to the following years’ budget, which reduces the amount of revenue necessary to fund that budget.  Since the only “flexible” fund source is property taxes (all other sources are based on fixed rates or fees) those surplus-surplus funds have the effect of reducing property tax collections.

If your eyes haven’t glazed over yet please allow me to explain the point of discussion.  It is reasonable for proponents of amendments to argue that the fund source is fund balance, and therefore does not affect property taxes in the coming year.  It is similarly reasonable to argue that because excess fund balance reduces property tax collections the ultimate source is, in fact, property taxes.  Net effect?  Not much either way.  My apologies if you were expecting something more profound.

Which leads us to the school district’s bond proposal.  Note the singular – unlike previous years when ASD proposed multiple bonds for voters to choose among, this year they’re bringing just one to the table.  From what I can discern the approach is that, since we’re all one community, we’re all in or all out.  That’s fine as far as it goes, but don’t presume you’ll hear a chorus of kumabya from the Assembly.

The point of contention will be that ASD’s proposed bond is $59 million, as opposed to the $55 million of debt they expect to retire in the current year.  This defies recent practices of keeping new bond issues at or below debt retirement levels, but that’s an incomplete answer.

Unlike the city, ASD took a bond holiday in 2010, proposing no bonds that year.  Additionally, of the five bond proposals in 2009 and 2011 (two in 2009, three in 2011), just one has received voter approval.  What that means is that ASD has retired more than $100 million in debt over the past few years.

That aside, let’s delve into details.  The sticking point in school board’s unanimously approved proposal will be $13.1 million allocated for career and technical education (CTE) improvements at West High.  Some Assembly members will seek to remove that piece in its entirety while others will seek to reduce it to only provide design funding.

Since I represent the only Assembly district with no high school I suppose I don’t have a dog in this fight, but since I’ve supported many (but not all) school bonds throughout the city I’m bothered by the idea that the only high school in Anchorage without dedicated CTE facilities (the current end-all, be-all solution to providing non-college-bound young people with skills necessary to enter the workforce) should patiently await the next bond.  My concern is not simply parochial, more that there are few needed major improvements in Anchorage neighborhoods that traditionally only support school bonds when said bonds affect their area schools.  If we are to see CTE improvements at West this is likely the only opportunity for the next several years.

What’s ironic about this is that the champion for adding West’s CTE construction was the board’s self-described most conservative member, who reportedly represented that he could keep the more conservative members of the Assembly from scuttling the idea.  We’ll see if he’s right.



This contribution was made on Saturday, 03. December 2011 at 12:38 and was published under the category Fiscal matters. You can follow comments on this entry through the RSS-Feed.

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1 Comment

  1. […] News from Assemblyman Patrick Flynn » Budgets & bonds […]

    Pingback: What we’re reading: Assemblyman Patrick Flynn – Budgets & bonds « ktvabjkhblog – 04. December 2011 @ 5:04 pm

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