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My Turn: CBJ budget deficit a chance to reexamine our priorities

Posted: April 1, 2014 - 12:00am

The City and Borough of Juneau reported an estimated $15 million deficit in its proposed two-year budget cycle. As a first action we need to quickly stop growing the deficit and begin to reevaluate what our city government is currently doing and what projected new activities ought to be deferred until we get control of the growing budget shortfall.

The First Things First Alaska Foundation (FTFAF) understands and appreciates that difficult decisions are ahead as our CBJ Assembly tackles this problem. The FTFAF supports the Assembly’s efforts to address the deficits in both the short and long term, provided that reductions to expenses are identified rather than increasing taxes.

The McDowell Group conducted a survey of Juneau residents in 2012. The survey found that citizens supported the goal to reduce spending prior to any revenue increases. We believe the CBJ should look first at its operations to make sure they are necessary under the charter and as efficient and cost effective as possible.

The CBJ is considering further increases in the property tax mill rate. We believe that the optional 1 percent sales tax revenues should be redirected to avoid increases to the property tax. If we continue to raise the property tax mill rate as has been proposed, we will very soon reach the maximum allowed mill rate. What then? Is it responsible to tax to the limit? Last week the average Juneau home was valued a5 $301,000, which comes with $3,209 in property tax. Should we add on another $69 or $102? Our town has the highest medical costs in the country. These things add up. The cost of living in Juneau is very high.

The current long list of 1 percent sales tax projects should be reconsidered so that money can go to maintenance of existing infrastructure and general fund operations. The sales tax votes are advisory and the Assembly can redirect these funds. In this time of budget deficit, the CBJ should not be expanding programs the CBJ should review its forecasting model to determine if it is accurately considering our aging population and the impact on both property and sales tax revenues.

There is also a proposal to add an additional 1 percent seasonal sales tax on top of the optional 1 percent sales tax (4+1+1= 6 percent total). This should be avoided, as it would unfairly target businesses that rely on the summer tourist season and preferentially impacts lower income workers. Raising tax rates is unlikely to generate the forecast revenue.

Unfortunately, the CBJ will not be able to make sufficient spending reductions without cutting personnel. The new labor contract has added $3.12 million over the two-year budget. If the contract precludes adjusting compensation, the only choice is to reduce personnel. There simply is not the money to fund increased salaries and benefits. According to the fiscal 2014 budget, the CBJ spends 54 percent of its budget on personnel. Direct payroll costs for core government services (excluding the Juneau School District and Bartlett Regional Hospital) are over $35 million. Benefits, at approximately 50 percent of payroll costs, add an additional $19 million.

CBJ largely operates as it did in the 1980’s, even though computerization could allow for the digitization of functions such as the print office and substantial streamlining of the finance department and other administrative functions.

It is opportune that the CBJ Assembly has initiated the Economic Development Plan in order to take a proactive and strategic approach to our future. The FTFAF strongly encourages the CBJ to work with businesses in the community to find ways to invigorate our local businesses in order to retain and expand their operations and grow jobs. We also need to actively pursue important development projects to grow the jobs and revenues CBJ needs to provide services to Juneau residents.

We believe a citizen group participating in the budget review would be of value to the CBJ. Such a review should involve consideration of the entire $80 million general budget. Individuals outside the normal structure can bring new perspectives to the deliberations and often find new and more economic ways to do business.

We believe the current budget challenges provide an opportunity to reexamine the spending by our borough and refocus on the basic services articulated in our city charter.

• Frank Bergstrom is treasurer of the First Things First Alaska Foundation.

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Tom Leston
Tom Leston 04/01/14 - 08:56 am
Actually, the 1 percent

Actually, the 1 percent seasonal sales tax is a good option because the people paying this tax do not live in Juneau. Tourists have a negative impact on our resources so they should contribute a little more.

In addition, we always hear businesses asking our government to find ways to invigorate local businesses. When was the last time local businesses gave their employees a wage increase? Businesses could actually invigorate themselves by giving their employees a wage increase. Employees getting a wage increase will turn right around and spend that money, which in turn would stimulate businesses. I doubt CBJ could do anything more helpful to invigorate our community than businesses give their employees a wage increase.

"FTFAF strongly encourages the CBJ to work with businesses in the community to find ways to invigorate our local businesses"

Ok CBJ, suggest to local businesses that they give their employees a wage increase.

Judy Hodel
Judy Hodel 04/01/14 - 02:28 pm
FTFAF Takers

FTFAF supports clear cut logging of old growth but opposes any sort of tax increase. But they don't mind the Federal subsidies that pay for logging roads and the essentially free trees. Sure they pay a stumpage fee that equates to the price of a Big Mac for a tree that could be made into a nice house.

FTFAF also wants to turn over the CBJ fianance dept to a local CPA firm that pays thier employess 2x more than CBJ. Gotta love the cronyism!

Bill Knabke
Bill Knabke 04/02/14 - 07:15 am
Frank's right

A citizen group reviewing the CBJ budget would, no doubt, come to the same conclusion he suggests: The budget is obese and could benefit from a low carb diet.

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