Juneau city manager warns of property tax hikes if state ends school bond debt reimbursement

Harborview Elementary School in Juneau, photographed on July 5, 2018. (Photo by Jacob Resneck/KTOO)

Shifting costs for school maintenance debt could result in an increase in property taxes in many communities, and the City and Borough of Juneau is not happy about it.

The Alaska Legislature is debating potential cuts to school bond debt the state has historically paid for.

Juneau City Manager Rorie Watt explained at a committee meeting of the Juneau Assembly on Monday that Juneau may owe up to $23 million more than planned if the state decides to stop paying its portion of debt for school infrastructure permanently.

The city would have to pay $7.1 million this year alone.

“So we don’t know on funding of school debt if we’re going to get the House version, the governor’s version, the Senate version. And we don’t know if it’s this fiscal year, every fiscal year moving forward,” Watt said.

Watt said that if the state decides to shift the costs onto municipalities, Juneau residents can expect to see local property taxes increase between 4.5%-14% over the next several years.

Watt and other municipal leaders across Alaska have accused the state of reneging on its commitment to fund up to 70% of school bond debt.

“We want to make the best financial decision in the way that’s the least impactful to our taxpayers and citizens, but we don’t know if the state is going to honor that program,” Watt said.

Gov. Mike Dunleavy’s proposed budget eliminated funding for the state’s reimbursement of school bond debt.

The House voted to fund half of school bond debt in its version of the budget. So far, the Senate has shown support for fully funding the program.

Whatever the Legislature decides, Dunleavy may veto all or some part of the funding.

The Assembly Finance Committee is currently working on the city budget and considering potential property tax increases.

The Assembly will likely have to revisit the budget this summer after the state budget is finalized.

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