Voters may decide on cash for cities

Posted: Wednesday, March 09, 2005

A proposal in the Legislature would let voters decide whether to tap the Alaska Permanent Fund and send about $150 million annually to cities across the state.

Rep. Bill Thomas, R-Haines, hopes voters would approve the appropriation so communities could lower sales taxes, property taxes or help provide essential municipal services.

The proposal would send $50,000 to each municipality and $25,000 to unincorporated communities.

The $150 million payout would be adjusted annually for inflation, raising the amount to about $184 million by 2015, according to the Alaska Permanent Fund Corp.

"This plan has little effect or hardly any effect on the Permanent Fund dividend," Thomas told the House State Affairs Committee on Tuesday.

The corporation said if the program started in 2007, dividends would drop by $10 in 2010 and by $20 in both 2011 and 2012. By 2015, dividend recipients would have lost a total of about $165 under the program, according to the corporation.

Laura Achee, a spokeswoman for the corporation, said using the fund's earnings would slow the growth of the fund.

Under the current system, the $30 billion fund is projected to reach about $47.8 billion by 2015. Under Thomas' proposal that number would be about $45.9 billion, the corporation said.

Thomas said the proposal would help replace municipal revenue sharing and other aid to cities cut by Gov. Frank Murkowski in 2003. The $22 million municipal revenue sharing program cut has been partially replaced this year by one-time federal grants to cities.

Kevin Ritchie, executive director of the Alaska Municipal League, said the appropriation would allow communities to put more police officers on the streets and hire other essential municipal employees.

"We have a number of cities around the state that have no public safety," he said.

He said the appropriation could be used to reduce the average property tax by one-third, or by about 4 mills, for all applicable cities in the state. Ten mills equals 1 percent of the value of a piece of property.

If the bill is approved by the Legislature, it wouldn't be the first time the public has voted on whether to spend permanent fund earnings for government services. In 1998, 83 percent opposed using the fund to balance the state budget.

Thomas said people he's talked to support the bill.

But it might be difficult to get support in the Legislature with a windfall from high oil prices projected to send more than $460 million to state coffers this year.

Thomas said the windfall doesn't filter down to communities and the public should have the chance to vote on the proposal.

The House State Affairs Committee did not take action on the bill Tuesday.

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