Committee nixes 1% sales tax

Group favors putting 2 school bond measures on Oct. ballot

Posted: Thursday, July 29, 2004

Concerned about overwhelming the public with expensive ballot measures in October, the Juneau Assembly won't ask voters for a temporary 1 percent sales tax, Finance Committee members said Wednesday.

But members did recommend that the city's liquor tax be increased from 3 cents on the dollar to 5 cents.

Assembly member Marc Wheeler said alcohol has a huge impact on the community and its public services. Raising the liquor tax could be seen as broadening the tax base, he said.

Each cent of the 3-cent liquor tax raised about $230,000 this year, said city Finance Director Craig Duncan.

City Attorney John Hartle said the city could expect litigation if it raises the tax, and it might not want to spend the revenues until the legal issue is decided.

State law restricts the ability of cities to tax one item more than another. The current liquor tax is grandfathered in. But raising the tax could be seen as creating a new tax subject to the restrictive state law.

The Finance Committee, which comprises all Assembly members, decided unanimously not to recommend a 1 percent general sales tax measure. Member Jeannie Johnson was absent.

The decision means putting off such possible construction projects as a community center at Dimond Park, expansion of the sewer system, a new airport terminal, an expansion of Statter Harbor at Auke Bay, a new downtown parking garage and tying Eaglecrest Ski Area to the city's electric grid.

Those were an ad hoc committee's recommendations of city construction projects in the near term.

Instead, the Assembly is likely to place on the ballot a $54 million high school at Dimond Park and the redirection of $18 million in already-sold bonds to fix up schools. Those projects would be eligible for 70 percent reimbursement by the state.

The city has estimated that the local share of the high school debt would be $51 per $100,000 of taxable property for 15 years.

The local cost of continuing to pay for the $18 million in previously issued bonds is $18 per $100,000 of taxable property.

The Assembly will meet on Aug. 9 to consider introducing ordinances to place those bond measures on the October ballot.

Not asking voters for a multi-year 1 percent sales tax was a big decision, said Assembly member Jim Powell. But members felt that voters aren't in the mood for higher taxes.

Wheeler, referring to the citizens initiative that blocked a high school at Dimond Park in a May 25 special election, said: "I think the initiative really bollixed our ability to pursue other projects until we get the school cleared out of the way, and that makes me really sad."

Assembly members also discussed whether to recommend that there be two ballot measures related to the high school. Most Assembly members spoke against the idea.

The first proposition would ask voters if they wanted to bond for a high school at Dimond Park in the Mendenhall Valley. The second proposition would ask voters if they wanted to renovate the Marie Drake building next to Juneau-Douglas High School if the first proposition failed.

Wheeler argued that a two-prong approach would make it more likely that Juneau ends up with some high school project before a Dec. 31 deadline to receive approval for state reimbursement of 70 percent of the bond costs.

"I'm not willing to have no solution at all at the end of the day," Wheeler said,

Mayor Bruce Botelho said some citizens have talked about having a choice, but he thought two ballot propositions would pit voters against each other and make it more likely that neither measure would pass.

And Botelho was concerned about the Assembly's relationship with the Juneau School Board.

Some members said it wasn't right for the Assembly to support a ballot proposition that the School Board hadn't recommended.

The authority to plan new schools is a long-standing sore point between the Assembly and the School Board.

City Attorney John Hartle said the Assembly has the ultimate decision about what goes on the ballot.

Assembly member Randy Wanamaker said the Assembly's role is to say yes or no to School Board recommendations, but not to substitute its own plan.

"We don't have enough time to do their jobs," Assembly member Merrill Sanford said of the School Board. "And they've done a great job for us."

School Board Vice President Bob Van Slyke said that if a bond measure for a Valley high school failed, the board would place the project on its list of future capital requests to the state.

In the past, such a process means that a Juneau project must compete for priority against other needs statewide. The Dimond Park high school didn't rank high on past state lists.

All of the Finance Committee members except for Wanamaker supported placing on the ballot a measure to redirect $18 million in bonds to major maintenance projects in the schools.

The bonds were sold to build the Dimond Park high school that was approved in 1999 but blocked by voters this May. The bond proceeds haven't been spent.

Wanamaker said he'd rather defease the bonds, which refers to investing the bond proceeds and using the interest to pay off the bonds. That would relieve property taxpayers of the debt, and the Assembly could consider reducing the mill levy, he said.

But other members said it was important to keep up the schools and to garner state reimbursement for the projects.

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