Borough budget talks begin

PALMER — Property tax payers nervous about a possible state income tax may get something of a break, if the proposed Mat-Su Borough budget unveiled at a presentation Tuesday survives upcoming deliberations unaltered.

Borough manager John Moosey told assembly members at the meeting he plans to keep the borough’s property tax mill rate at 9.984 for the fiscal year 2017 budget. That’s the same mill rate amount established by the assembly for the fiscal year 2016 budget.

A mill is a unit of property tax measure equal to $1,000 of assessed property value. That means that under current rates, a house assessed at $100,000 would generate an annual property tax bill of $998.40.

A contributing factor to the mill rate plateau is the borough’s assessed value, which grew by about 3 percent between 2015 and 2016. Officials expect the 2017 assessment to increase by about 5 percent, Moosey said. Increased valuation means the same tax rate can produce additional revenues, as individual taxpayers pay more for homes now worth more, or as homes are constructed on properties that didn’t have them before.

Both factors contributed to the borough’s increasing property values, Moosey said.

“That has to do with homes being sold at a higher rate, and also growth,” he said. “We’ve have a ton of new rental units and homes put up this past year.”

Residential growth — without corresponding business growth — also puts the burden of funding local government primarily on local property taxpayers. Property tax bills account for 65 percent of all borough revenues.

“The key has been getting commercial to carry some of this burden, and we are not there yet by any stretch of the imagination,” he said.

The most likely potential source of additional commercial revenues in the presentations given Tuesday is Port MacKenzie. The port has had only a single profitable year — 2008 — since it came online, according to testimony by Port Director Marc Van Dongen. Thirty-three vessels off-loaded at the port last year, and generated about $190,000 worth of revenue. By contrast, port operations for two full-time port employees and one on-call employee cost $980,696.

Port construction, particularly the construction of a rail line connecting the port to the Alaska Railroad using primarily state funds, has drawn fire from local and state commentators, who labeled it a failed megaproject. Based on past periods of heavy operation, the port has the potential to generate between $5 million and $6 million per year in additional revenues with the construction of the Port MacKenzie rail spur, Van Dongen said.

Additional funding for the rail spur has not been approved by the Legislature, and local officials instead are seeking to establish a partnership with private companies to finish the remaining segments of the rail spur, Moosey said.

The bare-bones budget sketch presented to the assembly — the formal presentation of the draft budget, including projected expenses and revenues, is set for April 19 — is designed to be flexible in order to account for last-minute changes to state-determined items like the Public Employee Retirement System (PERS) and the Teacher Retirement System (TRS), as well as federally set items like the Payment in Lieu of Taxes (PILT) program. Planners are also waiting to see how the oil price crash will affect the local economy, and what burden possible reductions in state services will place on local budgets.

“I think I’m going to call this the 'pivot budget,'” Moosey said. “There is not going to be anything significantly new, or anything significant being removed.”

At the same time, the final responsibility for the mill rate lays with the assembly, Moosey said.

“The assembly may choose to — as they always do — make some modifications to that mill rate one way or the other,” he said. “We are prepared to do that.”

Following the April 19 introduction of the budget ordinance, officials plan to have an informal discussion about the budget on April 20 from 5:30 p.m. to 7 p.m. at the borough building in Palmer.

The assembly also plans three public hearings on the budget, the first on April 28 at 6 p.m. in the Central Mat-Su Public Safety Building, located at 101 West Swanson Avenue in Wasilla; at the Glenn Massay Theater at 6 p.m. on May 2; and at the Willow Community Center, 23625 W. Willow Community Center Circle at 6 p.m. on May 5. Budget deliberations are scheduled to begin May 9 at 6 p.m. In all, three deliberative meetings are scheduled for May 9, May 11, and May 12. Possible mayoral vetoes are scheduled to be taken up at the May 17 assembly meeting.

For more information, visit matsugov.us

Contact reporter Brian O’Connor at 352-2270, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.