Property tax increase contested as Juneau officials budget for an uncertain year

Traffic moves down Marine Way past Juneau City Hall on Sept. 25, 2017. (Photo by Jeremy Hsieh/KTOO)
Traffic moves down Marine Way past Juneau City Hall on Sept. 25, 2017. (Photo by Jeremy Hsieh/KTOO)

The Juneau Assembly and city finance staff are working on next year’s budget. It’s going to be an especially fuzzy process this go-around because of big, unpredictable factors related to the pandemic.

Without any changes, current spending levels would wipe out the city’s $35 million of cash and reserves in two years.

With the economy hunkered down and cruise season suspended, city officials know they’re going to have millions of dollars less in sales taxes and cruise ship taxes.

They’re looking for ways to cut spending and increase revenue. On the spending side, the city manager has recommended significant reductions in capital projects. And on the revenue side, he’s suggested a property tax increase.

The Juneau Chamber of Commerce called on its members last week to oppose the property tax increase.

“Taxing your way to prosperity never has worked before,” said Charlie Williams, president of the chamber board. “But you know, we understand the Assembly has a tremendous challenge — tremendous challenge — ahead of them, and I’m certainly glad I am not one of the individuals sitting in that hot seat.”

The chamber didn’t offer specific alternatives. Williams said that’s not its role. But he said we’re all in this pandemic together, and that the costs should be equitably split between the public and private sectors.

So far, the city hasn’t had laid off or furloughed regular staff.

At a recent Assembly meeting, city Finance Director Jeff Rogers offered some context on the property tax increase.

“The increase of 1 full mill seems like a very large amount in one year. And by any definition, it is,” he said.

But property taxes have been this high before. Fifteen years ago, rates tended to be as high or higher than what’s being proposed. They’ve come down since then due to a variety of factors.

“We may be responding to an unprecedented crisis with a fairly precedented tax,” Rogers told the Assembly.

The proposed increase works out to an extra $100 in taxes per $100,000 of a property’s assessed value.

The property tax increase would take care of about a third of the city’s projected deficit. The ever-evolving pandemic response could also dramatically change the city’s budget assumptions.

Loren Jones is serving on the Assembly for his eighth year. He chairs the committee working on the budget.

“We’ve had some downs, we’ve had some reductions. … Always had more requests than we had money, but nothing like this.”

He said these are the big unknowns:

  • What financial aid, if any, is coming to municipalities from the state and federal governments?
  • When will cruising resume, and will the pandemic have a lasting effect on that industry’s recovery?
  • When will public health mandates affecting revenue at the city-owned hospital and airport be lifted?

There’s also the governor’s veto of state funding for school construction projects. Juneau was counting on a few million dollars from the state to pay down those debts. The governor said he still intends to fund it with federal emergency dollars. However, it’s unclear if that’s legal.

Jones expects the Assembly will have to revise the budget.

“The philosophy we’re taking is that we are going to try, within our knowledge, to put together a budget based on our best estimates, knowing that it might be required that we revisit the budget one or two times during the year,” he said.

The city has created an online budget tool that the public can play with that makes it easy to plug in numbers and assumptions to balance the budget. Jones suggests people get informed about what the city has to work with when it comes to the budget, and then offer concrete suggestions at public testimony hearings.

The budget must be finalized by a June 15 deadline.

The Juneau Assembly plans to meet at 5 p.m. Wednesday for public hearings on the budget. To submit public comment, email BoroughAssembly@juneau.org in advance or participate by phone . You can follow that and other Assembly meetings on the city’s Facebook page and KTOO radio.

 

Jeremy Hsieh

Local News Reporter, KTOO

I dig into questions about the forces and institutions that shape Juneau, big and small, delightful and outrageous. What stirs you up about how Juneau is built and how the city works?

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