Local officials want action on fiscal gap

Posted: Friday, January 25, 2002

Mayors and other municipal officials from throughout Alaska are calling on the Legislature to approve new taxes this session as part of a long-range fiscal plan to fix the budget gap.

But the officials, in the annual State of the Municipalities address Thursday in Juneau, didn't say that's what their constituents want.

Members of the Alaska Municipal League and the Alaska Conference of Mayors made their comments following a joint board meeting of the two organizations.

They announced they support an income tax, with a credit for local taxes paid. They also are willing to back increases in alcohol and motor fuel taxes but don't want the state meddling in sales or property taxes, which Anchorage Mayor George Wuerch described as the exclusive domain of local governments. They also support a spending cap as part of the response to a structural $1 billion deficit.

Municipal officials are worried about the state budget gap because a sudden downturn in state spending on education and infrastructure would pass the fiscal burden on to them. They also believe revenue-generating economic development won't occur until investors are certain how much they'll have to pay the state in years to come.

The group vowed to keep pressing legislators for action this session, insisting a solution can't wait because a key reserve fund will be gone in two years.

"It's possible that a plan will not emerge," said Ketchikan Mayor Jack Shay, president of the Alaska Municipal League. "It looks to me like those who are resisting it, I'm not sure, but they may be doing it because it's an election year. I don't know. But I think those with any kind of courage will step up."

Shay, speaking with Wasilla Mayor Sarah Palin, president of the Alaska Conference of Mayors, appeared to acknowledge that there's a risk in voting for new taxes. He said legislators he has talked to don't view politics as their career, implying that they're not scared of losing.

Mike Scott, an Anchorage utility manager who is legislative chairman for the Municipal League, said a few Republican senators have talked about tax increases, including a $50 cruise ship head tax or a "dime a drink" increase in alcohol taxes. Each of those taxes would raise about $30 million.

But key Senate Republicans, including Finance Co-Chairman Dave Donley of Anchorage, have said there should be no broad-based taxes imposed until voters approve a constitutional limit on spending. And local officials didn't challenge Donley's assertion that the public doesn't support an income tax.

While Democratic Gov. Tony Knowles has proposed raising $400 million in new revenue for three consecutive years, starting this session, Scott said the phase-in of the new tax structure could be five years. He declined to name a minimum amount municipal officials believe must be raised this year.

"Keeping in mind, there's also new spending that's been put on the table," Scott said. "So the net that's being proposed really isn't 400-plus. ... Clearly, something more than 100 million-plus is what you need."

The local officials also are pushing the concept of a "municipal dividend" from the permanent fund, under which revenue sharing would be financed by use of so-called "excess" fund earnings left over after dividends are paid to residents and the principal is inflation-proofed. That would take about $10 off each resident's dividend to provide stable funding for public safety, roads and other municipal services, Scott said.

Bill McAllister can be reached at billm@juneauempire.com.

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