Lawmakers should choose revenue sharing over tax cap

08/02/05

Spectrum/Kathie Wasserman

I read, with interest, the Spectrum piece offered by Rep. Vic Kohring a few weeks ago concerning local tax-cap initiatives (Wasilla representative supports tax-cap initiative).

It seems that what might be missing in his opinion piece is the explanation of why the Mat-Su Borough or any other municipality in the state of Alaska appears to be spending "faster than taxpayers can fork it over."

Simply, the expense of providing local services has risen tremendously and the sharing of revenue from the state has stopped. Many question how a 10-percent increase in population can result in more than a 10-percent increase in government expenses.

But every new resident that comes to a community requires much more than just one service. Their presence is felt in increased service with regard to education, police protection, sewer, water, fire protection and various other provisions.

Should taxpayers revolt when property taxes get so high that they are priced out of their homes? While being mindful of the cost of the provisions each community desires, it certainly is our right to fight tax amounts that fund government over and above reasonable expense levels.

But perhaps the strong message being sent to the local government should instead be redirected to Rep. Kohring and the state government.

While the state government has rejoiced in the "windfall" that high oil prices have bestowed, Alaskan municipalities and Alaskan taxpayers have realized higher prices at the pump to run their vehicles, boats, home heaters and to pay for freight and transportation costs.

High oil prices have been a huge benefit to the state of Alaska, not necessarily to Alaskans. Municipal revenue sharing, which was a means for the state government to "share" resource wealth with political subdivisions (municipalities) was zeroed out a number of years ago. The state now keeps that money.

The message from the state Legislature to municipalities has been clear. If you don't have enough money to provide services or to purchase a fire truck or ambulance, either cut those services or raise taxes to pay for them.

Rep. Kohring was particularly lamenting the plight of seniors who find themselves unable to keep their homes due to skyrocketing property taxes.

Rep. Kohring is an esteemed member of the one group that can solve that problem.

Alaska statute requires that all Alaskan municipalities (cities and boroughs) exempt the property tax on the first $150,000 value of the primary home of seniors and disabled vets. Most Alaskan communities feel that is a good practice and would follow it even if it were not required.

However, the state committed in that same statute to reimbursing all Alaskan municipalities for that exemption, as it was a state mandate and not within the control of the local government to be flexible on limits, requirements, etc., of that exemption.

This unfunded mandate to exempt is still in effect. The reimbursement? Long gone. So as the state looks at a budget that has ballooned, oil prices higher than we could have ever imagined and a gas pipeline on the horizon, we see communities that must provide basic services borne only on the backs of taxpayers, communities without police protection, communities without insurance, communities with a growing senior population, communities that see absolutely no state presence.

We see communities shutting down and turning their basic service provision infrastructure over to their local tribes, and community residents subsidizing a percentage of property taxes to all seniors without a say on how the program might work and regardless of the individual need or lack thereof.

While this last legislative session saw a huge amount of money going to rural communities for infrastructure needs, it is received at a price. New airports, runways, roads, water systems, community halls and washeterias, while terribly important, much

as they are in any other

local community in the

U.S., require added maintenance, upkeep, staffing and insurance.

This is the area where all local governments are finding themselves in a huge pinch. After new infrastructure is built, the state's financial help is gone. The municipality must then rely on user fees and local taxes to pay for the R&R and operation and maintenance costs arising from that project.

The voters of this state voted against the imposition of a property-tax cap, knowing full well that a tax cap would hamstring their local governments from being able to raise revenues when needed.

I would encourage those who advocate for local tax relief to speak to their legislators about the restoration of municipal revenue sharing as well as the reimbursement to local governments of the senior and disabled veterans property tax exemption.

Kathie Wasserman is the policy and program coordinator for the Alaska Municipal League.