I am proud of the long tradition of local government in the Mat-Su. Palmer pre-dates statehood, and all four municipalities are at or near 50-year histories. Just think, the Mat-Su Borough itself has been in place for longer than 118 out of 165 other incorporated communities in Alaska. Providing services to more than 100,000 residents, the local governments in the area are at the forefront of growth in the state. Residents enjoy a high quality of life, with low tax burdens and strong economic growth. Residents, in large part, pay their own way. The proposed FY20 budget negatively impacts Mat-Su increases the demands on taxpayers, threatening services and increasing the potential for local taxes.
Local governments are sustained by resident buy-in and taxpayer contributions. But municipalities also participate in the State’s pension system, PERS. The State’s oversight of PERS has resulted in an unfunded liability for the region of $58 million. Your local government can’t “rightsize” by eliminating departments or classes of employees without incurring a costly termination study that includes paying down that overall debt.
The Mat Su’s school bond debt totals $227 million. While voters approved this with the understanding that the State would pick up the majority of the payments, legislation proposed by the Governor passes the entire burden back to taxpayers in the Mat Su. Future bonds may be for debt service, not new or improved schools. Roughly speaking, Mat Su taxpayers will be paying twice as much on debt service for the next 16 years. Let me be clear, this is for past debt, and local governments approach debt obligations differently than tax increases for other services.
The Mat Su pays $20 million more to schools than the State requires. Reductions in the State’s budget for education means residents — instead of charting their own course — pick up the difference. Instead of local control, residents will work with local governments and the school district to keep class sizes from increasing, essentially maintaining the status quo.
The total cuts and cost-shifting that impact the Mat Su is $65,852,448. This includes human service and emergency planning grants, as well as reimbursement for Port Mackenzie debt, and extends to the statewide economic benefits of the university and marine highway.
The State has said it will do less with less. This fundamentally means fewer services to the Mat Su. It means that Mat Su residents will shoulder a greater burden, subsidize State services, and potentially experience a decreased quality of life. State cost-shifting to the Mat-Su will threaten a region with the highest economic and population growth in Alaska.
This scenario can be averted. There are solutions to the State’s fiscal challenges that don’t include you shouldering more of the cost-shifting and cuts than you choose to. Here are four messages you can communicate to your Senators and Representatives, and the Governor:
1. Alaska is not “open for business” if it means that local governments have to consider increases in local taxes, spending from savings or decreased services
2. Alaska is not “out of money, out of time” — we can address revenues and balance the budget through a multi-year process
3. We are not “restoring trust in government” if the State breaks its promises to local governments and school districts by reneging on school bond debt and port improvement reimbursement
Locally elected officials — who are closest to the people — stand in fierce opposition to cost-shifting and cuts in services that residents depend on. I am concerned that the Mat Su will get the short end of the stick — a short term economic boost and a long-term deterioration of 50-year-old local governments that will struggle to meet the obligations taxpayers have chosen to take on. Help us advocate for stable local taxes, continued economic and community development, and municipalities and school districts that maintain local control.
Nils Andreassen is the Executive Director of the Alaska Municipal League (AML). AML is comprised of 165 incorporated cities and boroughs, and offers best practices, support services, and advocacy to its members.