On the eve of our second (and final) public hearing on the 2010 municipal budget proposal comes news the mayor vetoed an Assembly resolution supporting use of state municipal assistance, estimated at $15 million, for property tax relief. He prefers to use those dollars for city services. This issue may seem rather esoteric, especially since it has no effect on how much property tax you pay in 2010, but it is the primary structural question to be addressed before finalizing the budget.
Here’s how it works (I’ll round some numbers off to keep it relatively simple, and I’m going to ignore a proposed debt payment deferral in my example):
Editor’s note: the tax cap is actually one dollar figure that covers both MOA and ASD funding. Traditionally the revenues under the cap have been divided between the two entities with each behaving as if there were two caps, one for MOA and one for ASD, thereby encouraging both to live within their respective means. Under the charter only the Assembly can assess taxes, and does so for both entities.
Proponents of using state dollars for property tax relief, myself included, consider those state dollars a one-time source of revenue. If the state sends the money the following year, great, we can provide property tax relief again. If not, we engage in a community conversation as to how much of that amount we should cut from services and how much we should allow taxes people actually pay (as opposed to their being off-set by state dollars) to rise. Opponents, those who would use state dollars for municipal services in order to keep us further under the cap, correctly note that doing so slows the growth of the tax cap thereby applying additional restraint on government spending. If state dollars show up the following year, great, if not we have to cut services to reflect the loss in revenue.
Here’s where I think the rub lies – I trust my Assembly colleagues and administration officials to balance the competing community goals of low taxes and a reasonable level of services. It is clear that some residents do not, instead believing we will always tax to the cap and thereby trying to compound the tax cap’s effect by restricting its growth more than the existing restraints already do.
That’s a healthy debate, a healthy tension, for government – it should be hard to increase taxes. It’s also important to look into the future and recognize there are some fiscal scenarios that look pretty healthy and others that look pretty grim. I prefer to give ourselves the flexibility to effectively address any of those scenarios. With that, I welcome your thoughts.
Regards,
Patrick
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I’m sorry I do understand what you are saying here, but this is not what the people want. We have to live within our means and we want the city to do the same. If its means less services then that is what we need to do. We need to make sure there is fire, police etc and then cut from there. If people want the extra services they will find a way to make it happen with costing us more. We are tapped out and cann’t afford anymore, you guys need to understand this, we feel like you don’t listen to us. People can go back and help out if they want these other things open…that is the way it should be.
You have to understand that next year things won’t be any better, we go through this all the time. So cut the budget, do the hard thing, just like I have to do with mine
Thanks Susan
Comment: Susan Patterson – 03. November 2009 @ 3:17 pm
Sullivan is shorting the cityion the long run. He is setting us up for fiscal problem down the road. A few short years ago we were faced witht he problem of losing revenue sharing. It was then we decided to use it for tax relief and not depend on it.
Is it smart or fiscally conservative to borrow money and pay interest to cover operating costs? I know it is important to keep taxes down but we will pay more in the long run with this approach. Why would the Mayor put this idea forward?
We may need to have a serious debate about our tax structure. I believe we are leaning on property tax payers too much. I do not believe we are over taxed or have a bloated city budget. Police, Fire, snow removal are all important but so are libraries, parks , trails, roads and other city services. We will not attract any businesses to this city if we are run down and lacking infastructure. Businesses look at quality of life, education system,etc
Once again we are not over taxed in Anchorage. We do lean on property owners too much. The discussion needs to go deeper.
Comment: John Doe – 03. November 2009 @ 4:34 pm
Patrick
The Sullivan Administration has used the stock market crash and the poor tourism numbers as the perfect tool to scare Anchorage taxpayers. rAt the end of August, Anchorage’s investment accounts were nearing pre-crash levels. I would be anxious to see what they are at now. By using revenue sharing for general services instead of property tax relief, Mayor Sullivan has reduced the cap, thereby ensuring that every Fall he can scream that the sky is falling and we’re going to have to reduce services. And refinancing current debt will only push higher taxes out to the next sucker, er, Mayor to deal with it. The end result of this will be an Anchorage similar to what we had at the end of Finkstrom era…parks and trails badly in need of repair, terrible roads, police and fire in desperate need of new blood.
We are not overtaxed in Anchorage. My family alone pays $5,000 in property taxes, but that was basically zeroed out by the PFD. It’s not unreasonable to ask the City and ASD to scrutinize their budgets, finding places to cut waste and generate efficiencies, but at some point residents need to realize that to live in a great City, you will have to pay for it.
Comment: Eric – 03. November 2009 @ 6:42 pm
Would you be willing to write a post on the tax cap?
My understanding, which was clearly flawed, was that the cap made it effectively impossible for the city to lower taxes by recapping at the lower dollar amount if taxes were lowered for a year. From your post, I presume that you can lower taxes for a year without readjusting the cap.
Thanks! And thanks for keeping us informed.
Comment: Sam – 04. November 2009 @ 8:51 am
Patrick-
I have a couple of questions about the budget:
1. Where did Mayor Sullivan find $30,000 to tear down the stairs in Government Hill?
2. How solid are the mayor’s budget deficit projections for 2010? I saw a budget spreadsheet on AMEA costs for 2010 that had a narrativestating a 7.4% increase in medical costs, but was calculated out in the budget by 9.6%. Regardless, I thought that the city changed medical plans in order to keep medical costs flat in 2010. The budget also added over $1 million in employee costs for those working under grants without taking into account income from grant indirect costs. Hopefully they’ve since revisited and fixed this specific projection, but it makes me skeptical and wonder if the projections we see as the public are based on something other than sound math.
3. How did Mayor Sullivan come up with funds for the two new executives to lead the new homeless task force? It seems like a policy that adds $70K+ executives and cuts $30K staff would make a good lightbulb joke, but I’m worried that the outcome of such a policy would leave Anchorage sitting in the dark with an electric bill.
4. Can you recommend ways to approach the administration with these questions without having to hear lamentations about Begich and Unions being the real enemies or be called a socialist if I express that I want to keep a city service available to the disadvantaged. I’d like to see our city government work like a democracy.
Thanks for your time.
Comment: K.Robbins – 04. November 2009 @ 1:04 pm
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