I appreciate the opportunity to address the issues that Mr. Price raised in his letter last week. Yes, assessments have truly escalated, particularly along the Kenai River area up north, and in Homer and the South Peninsula.
In conversations with several of my constituents, they felt the borough was raising those assessments to increase government spending. Not true. State statute and realty sales are what drive assessments. The Borough Assessing department is charged by the State to assess based on the market value that exists on Jan. 1 of the tax year.
And it is because of the increases in assessments that the Assembly has often lowered the mill levy over the past few years. I believe it may happen again. Unfortunately, as the borough assessments increase, the state contribution to education, the borough’s biggest cost, is reduced, and the state requires Borough taxpayers to make up the difference. What helped us greatly last year was to receive the Municipal Revenue Sharing that was reinstated. With the decrease in state income, the future for revenue sharing is very uncertain.
Because sales tax is dedicated solely to education, but was only covering less than half of that cost, the decision was made to increase it to 3 percent. That gave some relief to property tax payers, which was the goal. The Borough Operations budget for 2009, as adopted by the Assembly last year, is $68,277,113, of which $45 million is for the schools. (That includes maintenance, custodial, post-secondary eduction and bond debt.) The balance of $27 million is for borough operations, including solid waste.
Of the funds for this budget, $28.5 million dollars came from the $53 million in property taxes collected, (including service area dollars that are separate from the borough operations budget), $29 million was projected for sales tax. (With the January change, we have yet to see that impact.) The balance is from federal, state and miscellaneous sources. But as you can see, the sales tax still does not nearly pay for the borough’s portion for schools. (The $53 million in property taxes includes: $43 million real property, $1.5 million personal property, $6.5 million oil and gas, $1.3 motor vehicle tax, and $1.2 million in flat tax and penalties.)
Mr. Price brings up the issue of lawsuits. I find it truly unfortunate that the borough has to defend themselves against what I consider irresponsible suits.
Let me explain.
The initiative brought forward requiring voter approval for project expenditures of tax payer dollars in excess of $1 million ignored what to do in an emergency. That was one of the expenditures cited in the recent ACT lawsuit. During the floods in Seward a few years ago, a bridge was badly damaged and had to be replaced. This was clearly a health and safety issue. To delay replacement of this bridge in order to go to a public borough wide vote would have been in my view, criminal. Lives were at stake. And the courts not only agreed, they strongly ruled that needed expenditures could not be limited by initiative.
Likewise, the initiative for term limits was very peculiarly written, making the vote retroactive for three candidates legally running in their districts. It put the Assembly in the unfortunate position of having to tell three duly elected members they could not be seated. Never mind that two of those districts, (remember, Assembly members are voted on only in their district), voted NO on term limits. In other words, the Assembly was put in the untenable position of saying NO to the will of the people of those districts. The three Assembly members effected had to pay out of their own pockets to engage legal assistance so they could be there for their constituents. Who wants to run for public office if that is what they could be faced with? The courts did find that element of the initiative (retroactive part) was illegal, and the ultimate seating of those three members was ruled legal. (The term limits did stand.) Had ACT been content with a simple term limit imitative, all that cost, and upset, would never have happened. (And why was the initiative accepted in the first place? Because there was no legal precedent to prevent it. That has now been established. I just deeply regret it has to be at taxpayer expense.)
On May 5, the mayor will bring forward his proposed budget. For the following month, there will be considerable discussion about those proposals. I encourage the public to be involved. What is in the budget will determine the mill levy required to pay for it. That will also be contingent on the impact of the sales tax changes, and the ultimate amount funded to the school district.
If you have questions, please call or e-mail. It may take me a day or two to get back to you, but I will. And I welcome your input.
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