July 07, 2019
Sunday PM

A Borough Assembly member (writing as a private citizen) recently expressed legitimate concerns about practices of State officials that have caused acute fiscal troubles throughout Alaska. The concerns expressed boil down to four points: (1) excessive spending growth; (2) deficit spending which masks true spending; (3) depletion of financial reserves; and (4) the likelihood of new or higher taxes.
Have our Assembly and School Board engaged in similar unsound fiscal practices but at an even larger scale? Consider the following:

(1) Regarding spending growth, in response to requests from the School Board, the Assembly appropriated $2.3 million (66%) more in discretionary funding for our schools this year compared to just two years ago.

(2) Regarding deficit spending, our Assembly made an illusionary cut in a recent mid-year supplemental funding request from the School Board. The Assembly halved the request knowing that the action would only increase the District’s employee health insurance fund deficit by a like amount. There was no spending cut.

(3) Regarding depletion of financial reserves, current spending levels for schools will exhaust the Borough’s Local Education Fund in less than three years.

(4) Regarding the prospect of higher taxes to support schools, tucked away in the Borough’s 230-page budget is the following 20-word warning: “. . . in order to maintain current funding levels, some additional revenue source must be identified within the next year or so." That “additional revenue source” might be a 50-60% increase in areawide property taxes over the next three years.

To be fair, two members of the Assembly voted against some of the increases noted above. Also, one School Board member gets a pass since that member was only recently appointed to the Board.

To maintain the investment by Ketchikan’s taxpayers in the 500,000 square feet of school buildings, the Borough must spend millions of dollars more. Additionally, the Borough is obligated to pay more millions of dollars for bonds issued for school capital projects.

Concerns about Borough fiscal issues are not limited to education spending. Increases in assessed values without commensurate reductions in tax rates are simply hidden tax increases.

For example, the North Tongass area’s assessed value increased 10.4% in just the last two years, but the Assembly made no reduction in property tax rates. Thus, compared to just two years ago, North Tongass property owners must pay 10.4% more property taxes for library services, fire protection, EMS, and schools.

Many Borough fees have also risen significantly in recent years. The impact on those who are subject to the fees is no different than tax increases.

With the exception of Juneau, Ketchikan is already the highest taxed community among every one of the 14 other local governments from here to Haines. That’s according to the most recent municipal tax report by the State of Alaska’s local government agency.

Ketchikan’s per capita taxes are already 19% higher than Sitka’s and 34% higher than the average of all the 14 local governments noted above.

Higher taxes hurt nearly everyone directly or indirectly. They are particularly difficult for low-income residents and many with fixed incomes. They also make it more difficult for local businesses to remain competitive.

Even greater fiscal trials lie ahead. In particular, Governor Dunleavy has vowed to cut an additional $730 million from the State budget next year ($51.2 million more than the $678.8 million in vetoes and legislative cuts this year).

The Assembly and School Board must develop and implement fiscal plans to bring about spending within our means.

Dan Bockhorst
Ketchikan, Alaska

Editor's Note:

The text of this letter was NOT edited by the SitNews Editor.

Received July 05, 2019 - Published July 07, 2019

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