Fiscal change urged for city

Assembly to look at senior tax exemption, selling off hospital

Posted: Thursday, May 11, 2000

A city task force has come up with a range of suggestions on how the assembly ought to collect and spend money, and what it can do with its resources. The ideas ranged from canceling seniors' sales tax exemption to selling off Bartlett Regional Hospital.

Mayor Dennis Egan appointed the Mayor's Fiscal Task Force members in September and directed them to address the city's then-looming fiscal problems. Members of the assembly were predicting city budget deficits ranging as high as $4 million annually, and task force members were instructed to try to come up with solutions to that problem.

The group presented its ideas at Wednesday's Finance Committee meeting.

``I think they're great recommendations,'' Egan said this morning. ``And there are obviously no politics involved. A lot of the recommendations can be implemented and, in fact, some already are.''

Egan pointed to the recommendation that the city divest itself of Bartlett Hospital, as well as the city's own water and sewer utility. ``That's exactly what's happening now with the city's health and social services (department),'' he said.

The task force, headed by former Juneau Mayor Jamie Parsons, made 24 recommendations in all. It cited weak prospects for the local economy, the ``graying'' of Juneau, a proposed statewide 10 mill tax cap and other factors as needing the assembly's attention.

``The local Juneau economy is flat and likely to remain flat for the next several years,'' Parsons stated in the task force report. The loss of 300 to 400 high-paying state jobs -- primarily to Anchorage -- during the 1990s, a lack of ``for sure'' major construction projects on the horizon, slack sales-tax revenue growth, and a leveling off in school district enrollment were all worthy of concern, he said.

The task force suggested the city ``stabilize the total sales tax at 5 percent by coordinating the 5-year expiration dates of the 3 percent portion and the 1 percent portion,'' a process that could involve placing both on the ballot in October.

A permanent 1 percent sales tax is part of the city charter.

The group also recommends changes among city sales-tax exemptions, among them the exemption for Juneau seniors; on the sale of building and construction materials; on house-rentals; on commissions charged on the sale of travel, lodging, adventure and similar services; and on sales made by nonprofits.

Task force findings also call for a stop to the reimbursement of Bartlett Hospital for bonded debt service and recommend the imposition of personal property taxes on cars, aircraft and boats.

``We're all aware that some of the recommendations are a little bit of a stretch,'' Parsons said. ``But the assembly may modify some. We thought we'd give them a full menu.''

Asked about the direction to eliminate the seniors' sales tax exemption and not the naturopaths' or lobbyists' exemption, Parsons said, ``It's a real knotty problem. Getting rid of some of (the exemptions) isn't really worth the grief. Some of the exemptions are there merely so we can be good neighbors.''

For Deputy Mayor John MacKinnon, improvement in the city's fiscal condition since the task force's formation -- an increase in property value assessments and a less grim picture with respect to state revenue sharing -- doesn't change the picture.

``A lot of the task force's recommendations are valid whether times are good or bad,'' he said.

Many of the recommendations will warrant ``a lot of serious discussion,'' MacKinnon said.

One of those refers to the removal of the sales tax exemption that local building contractors enjoy, said MacKinnon, a contractor himself.

Adding 5 percent to a $50,000 renovation doesn't make sense, he said. ``We need a healthy debate on that one.''

As for the city's divesting itself of its water and sewer utility, MacKinnon said ``the utility is a valuable asset, one in which the city has at least $100 million invested in.''

Selling it to a private group might mean a large infusion of capital, he said, but would not guarantee lower rates to consumers.

The Finance Committee moved that the task force recommendations next be considered at a meeting of the assembly's Committee of the Whole.

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