Officials: Failure to renew sales levy would tax city

Assembly considering five-year extension on the Oct. 3 ballot

Posted: Friday, July 28, 2006

Property taxes could rise, and schools and public safety programs would feel the pinch if voters choose not to renew a 3 percent tax levy in the October municipal election, officials say.

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On Monday the Juneau Assembly will consider placing a proposed five-year extension of the temporary 3 percent sales tax levy on the Oct. 3 ballot.

"We would have to make some pretty tough budget decisions if it didn't pass. Would we cut services? Would we increase property taxes?" said Craig Duncan, city finance director. "We're talking about a huge impact, so it would be a very difficult decision to make."

The city has a five percent sales tax now, but the 3 percent in question will expire on July 1, 2007. The city has a permanent 1 percent sales tax and an additional 1 percent temporary sales tax levy that is restricted to capital improvements.

Schools and public safety are the city's two biggest budget items, Duncan said.

"What do you hold and what do you cut?" he said. "And when you think that those two items make up $30 million of our tax-use dollars, how do you make up that amount?"

The city's budget for the 2007 fiscal year is roughly a quarter-billion dollars.

Duncan said programs for children also could be cut if the levy is not extended. He said $450,000 is set aside for youth activities, with $250,000 of that being distributed through an activities board and $200,000 distributed directly to the Juneau School District.

"This is not social-service grants," he said. "This is for youth activities."

Each percent of the sales tax generates about $6.85 million in revenues for the city each year, Duncan said. These funds are used for a variety of city services, including general operations, capital improvements and potentially the emergency budget reserve.

The city is expecting about 17 percent of its revenue to be generated by sales tax for the 2007 fiscal year, according to a summary of revenues. The document indicates that as the same percentage the city receives from the state.

The city is projecting it will generate $34.9 million from the 5 percent sales tax in the 2007 fiscal year and an additional $36.1 million in the 2008 fiscal year. Duncan said the revenue figures generally increase each year because of inflation and growth within the community.

District 2 Assembly Member Jonathan Anderson said the sales tax is vital to the services that citizens have come to rely on.

"This is just our basic, general nuts and bolts of the running of the city," he said.

Anderson said the community is worried about the high cost of living in Juneau, but he doesn't anticipate the sales tax to be struck because the alternative is losing basic services.

"We're aware from our own life that costs are high," he said. "But this is pretty much just the standard keeping the water and sewer running and the streets paved."

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