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Voters prepare to make their choices

Candidates, bond and 1% sales tax highlights ballots

Posted: September 21, 2012 - 10:56am  |  Updated: September 23, 2012 - 12:00am

In addition to selecting the City and Borough of Juneau’s next mayor, two new Assemblymembers and three members of the Juneau School District Board of Education, Juneau voters will also decide the fact of two ballot propositions — a general obligation bond issue and an extension of the 1 percent special sales tax, both of them intended to fund a list of projects around town.

Proposition 1 asks voters whether the CBJ should issue $25 million in GO bonds to pay for a number of capital projects, including the Juneau International Airport’s ongoing terminal renovations, the construction of the proposed Eaglecrest Learning Center, Centennial Hall renovations and the Aurora Harbor rebuild.

Proposition 2 is a five-year extension of the 1 percent special sales tax, a component of Juneau’s areawide 5 percent sales tax that is set to expire next year. Revenues from the sales tax gathered over that five-year period would go toward a longer list of projects, among them the planned Dimond Park public library, a proposed water filtration plant at Salmon Creek, Bartlett Regional Hospital’s planned Child and Adolescent Mental Health Facility, and deferred maintenance for buildings and parks under the purview of Juneau Parks and Recreation.

Ten million dollars from the sales tax revenues would also be used to retire part of the bond debt from Proposition 1, should both be approved by voters.

If Proposition 2 succeeds but Proposition 1 fails, that $10 million would be redirected, with $3 million going to fund Centennial Hall renovations and $7 million going toward the Aurora Harbor rebuild.

But if Proposition 2 fails but Proposition 1 succeeds, then without the $10 million to help pay down the bond issue, Juneau residents would see an annual property tax levy of about $42 per $100,000 of assessed value for debt service starting next year, from 2013 to 2033.

For those reasons, many see the two propositions as intrinsically linked.

“The two are related very closely,” said supporter Nancy DeCherney, who is also the executive director of the Juneau Arts and Humanities Council. “I think it would be hard if we don’t pass them.”

The JAHC is among the organizations that would benefit from the 1 percent sales tax extension, receiving $1 million for its planned Performing Arts and Culture Center.

Paul Beran, who sits on the Friends of the Juneau Public Libraries’ board of directors, said he “strongly” supports Proposition 2 because he believes Juneau needs a new public library, even though he disagrees with the CBJ Assembly’s decision to use 1 percent sales tax revenues to pay for maintenance.

“I think they did a tremendous job in a difficult area, and I think that’s part of democracy,” said Beran of the Assemblymembers. “You work together, and probably nobody is 100 percent happy, but this is our pooled discussion.”

About three-quarters of respondents to a internal survey of Juneau Chamber of Commerce members this summer said they disapproved of using sales tax funds for deferred maintenance as well.

That finding, among others, was cited by the Chamber’s chief executive officer, Cathie Roemmich, in an Aug. 9 letter to the Assembly suggesting it defer the sales tax issue until after the Oct. 2 election.

Four days later, however, the Assembly voted to place the sales tax extension on the ballot, along with the bond issue.

Roemmich said the Chamber is remaining neutral, not advising voters on how to vote. But she said she is encouraged by public discussion of the issues.

“Any time you want to extend a tax, a temporary tax, it always raises the eyebrows, because nobody wants an increase in their taxes,” Roemmich said. “But at the same time, there are some very worthwhile projects out there.”

DeCherney said she believes the Assembly, when confronted with the conundrum of receiving far more funding requests than the $44.8 million expected to be raised by a five-year 1 percent sales tax extension could accommodate, acted to ensure projects she considers important would be funded by adopting the idea of a $25 million bond issue.

“Personally, I think that it was a very creative way to get things moving in an interesting way,” said DeCherney. “What the bond allows us to do, as I see it, is get moving quickly on some projects that need to be done. … We have a lot of maintenance and upkeep and projects that I think we need to get rolling on right away, and the bond … sort of allows those things to happen.”

Finance Director Bob Bartholomew explained that while sales tax revenues would begin coming in Oct. 1, 2013, when the Proposition 2 extension would take effect if approved by voters, the $25 million GO bonds would be sold in early 2013, making that money immediately available for projects on the Proposition 1 funding list. Assemblymembers will have to determine how to prioritize allocations from the sales tax, he said, since those funds will not be available all at once.

“Those projects will be determined when we do the budget next year,” Bartholomew said.

Even if both propositions pass, starting in 2018, the year the five-year sales tax extension would expire, it is expected that a 15-year annual property tax levy of $39 per $100,000 of assessed value would be needed to pay for the remaining debt service on the bond issue.

Bartholomew said that as debt is paid down over the next six years, the amount in property tax earmarked for debt service will decline, so when the levy for debt service takes effect for fiscal year 2019, it is expected to stay relatively flat compared to FY14.

But Bartholomew said it is too early to predict whether total property tax will be higher, lower or the same then, whether or not the propositions pass.

“We don’t think the debt service component will be higher,” Bartholomew said. “What will total property taxes be will be based on two things — what happens to the budget, and what happens to your property values.”

Fiscal projections for both propositions, including the amount of the levy needed for debt service and the amount of revenue a five-year 1 percent sales tax extension would raise, are based on a 1 percent expected rate of inflation per year, which Bartholomew described as “conservative” but acknowledged could potentially be an overestimate.

“We tried to take a conservative projection,” said Bartholomew. “Most people are projecting higher than a 1 percent level of inflation.”

Bartholomew said that if there is new construction, which the projections do not account for, property tax revenues would be higher than projected.

“Any new construction in all that is a buffer,” Bartholomew explained. “That would expand the tax base, so in a sense, that might offset that 1 percent inflation risk.”

• Contact reporter Mark D. Miller at 523-2279 or at mark.d.miller@juneauempire.com.

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