What’s at stake with Juneau’s Prop 2? And why do we have to vote on it?

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(Pixabay licensed photo by geralt)

Proposition 2 in Juneau’s municipal election asks voters to authorize up to $15 million in new public debt to pay for repairs and improvements to city infrastructure.

A group called Yes on Two – Juneau is campaigning for it, and a former mayor is voting no.

Ballot questions like Proposition 2 come up pretty often in municipal elections. That’s because before city officials can take on this type of debt, the city charter requires a majority of voters to approve it.

Prop 2 would authorize debt in the form of general obligation bonds. City Finance Director Jeff Rogers explains.

“That’s a term of art in the financial market,” Rogers said. “A general obligation bond, specifically, is where we agree to use our full taxation power as a municipality to pay that bond back, to pay that loan — no matter what.”

In other words, when an investor buys a bond from the City and Borough of Juneau, the city gets the investor’s cash and promises to repay the investor over time with interest. And the city is obligated to raise taxes if it can’t otherwise make those payments.

Prop 2’s language limits where the money can be spent:

  • repairing school facilities and roofs,
  • improving and maintaining park infrastructure and recreation facilities, and
  • energy efficiency building maintenance projects.

To illustrate the impact this debt would have on individual taxpayers, city officials estimated how much they’d have to spend in annual payments, or debt service, over 25 years. Then they crunched some numbers to see what the burden would be if it were paid back entirely with property taxes. For a $300,000 home, it works out to about $50 a year — though the debt doesn’t have to be paid with property taxes.

Juneau Mayor Ken Koelsch poses for a shot in the City and Borough building on Tuesday, January 3, 2017. (Photo by Tripp J Crouse/KTOO)
Then-Juneau Mayor Ken Koelsch in 2017. (Photo by Tripp J Crouse/KTOO)

Former Juneau Mayor Ken Koelsch is urging voters to vote “no” on Prop 2, while a small group has organized to campaign for it.

Both Koelsch and the heads of Yes on Two – Juneau said school roof repairs are necessary. They both also said they like the idea of stimulating the local economy through capital projects.

But Koelsch had a column in The Juneau Empire headlined, “Debt is a  4-letter word.” He said the city has paid off tens of millions of dollars of debt in recent years. Now, between the city’s cash reserves and sales tax revenue, Koelsch says “the money is there. It’s just — I don’t understand why we need to borrow it. … And adding 15 million back is going the wrong way. We really need to continue on that track.”

He’d like the city to be more conservative with its debt and taxes to help make Juneau a more affordable place to live.

Koelsch also takes issue with the bundling of the school roof repairs with the other projects that he considers to be wants, not needs.

“And I don’t like being forced into those type of decisions,” he said.

Ian Fisk and Paul R. Kelly are the co-chairs of the group campaigning for Prop 2.

Fisk said bonds are a fair and reasonable way to fund important work.

School board candidate Paul Kelly poses with his future stepdaughter. (Photo courtesy of Paul Kelly)
Juneau School Board member Paul R. Kelly. (Photo courtesy of Paul R. Kelly)

“Because they spread the cost out over time, so that users of the infrastructure will pay for the work over the expected lifetime of the repairs,” he said.

And, Fisk said, some of the energy efficiency and maintenance projects would save taxpayers money in the long run. He said interest rates are low, so it’s a good time to borrow.

Kelly is the chairman of the Juneau School Board’s facilities committee. That, in part, is driving his interest in Prop 2. He said he’s seen the list of school maintenance projects get longer and longer each year. Several schools’ aging roofs are especially urgent.

“And before COVID hit, I toured Riverbend Elementary,” Kelly said. “And I was looking at buckets hanging from the ceilings. Trash cans placed strategically in classrooms or storage rooms to collect rainwater.”

Though they are opposed on this issue, Koelsch said their differences are only philosophical. Which is right in his wheelhouse, as a former government teacher at what’s now Juneau-Douglas High School: Yadaa.at Kalé. He said he was glad that Fisk, who was a student of his decades ago, wrote a response to his column in the Empire.

For candidate profiles and more information about Juneau’s municipal election, which is underway now through Oct. 6 by mail, go to KTOO.org/elections.

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