By Jerry Nankervis
It is once again budget time at City Hall. Because 2022 is shaping up to be a very rough year for families, I encourage members of the public to pay attention as City and Borough staff and the Assembly establish the priorities that will define this budget.
Following the government response to COVID, many people and businesses are in a worse financial situation this year than they were two years ago. Inflation is purported to be in the vicinity of 7.5%. Based on my observations at the grocery store and local retail outlets, I think that estimate is low for Juneau. A recent flight across country to visit family was twice as expensive as last year. Documenting my fishing boat with the USCG was $75 just now. Last year it was $25.
Inflation hurts consumers but it’s a huge windfall for City coffers. With inflation at 2%, the CBJ receives $400K more in sales taxes each year. At 6%, the additional taxes raised are $1.2 million. Do the math because it all adds up. If an item subject to the CBJ 5% sales tax cost $50 last year but $60 this year, the city collects more revenue. Now add in the new remote sales tax, which is expected to bring in another $2.5 million this year. The City doesn’t broadcast that these stealth tax increases even exist.
There is currently over $27 million in the CBJ Fund Balance and nearly $15 million in the Restricted Fund. Fund balance can be spent without a re-payment plan; the restricted fund cannot. Some of the Fund Balance money is Cares Act Funding, but even without that there is too much money in the CBJ “savings account.” The fund balance should have somewhere around $7 million.
Fund balance reserves have historically been used for unforeseen expenditures and as a hedge for employee contract funding when new contracts are negotiated which cost more than was already calculated in a current budget cycle.
These monies have not been accumulated by the assembly for additional “projects” as the finance director has indicated. The temporary 1% sales tax we vote on every five years is for additional projects. Building a large savings account of taxpayer monies should be very difficult for an elected official to justify, even more so to do it without the explicit consent of the taxpayers. The goal of a balanced budget is to have expenditures and income be the same. Balanced.
That huge fund balance amount is attracting the attention of groups and elected officials determined to spend it. A new city hall, new convention center, JACC, gondola for Eaglecrest, school district, etc. Everybody wants free money…it just isn’t free.
The recent federal infrastructure bill comes with strings attached. Those strings will probably include state and local money matches. How much money? We probably will not know until the end of May, after our CBJ budget is hammered out. It sure would be nice to have that money available to meet a match rather than use it on some shiny new project and then have to raise the funds all over again.
Let’s talk about property taxes. Our millage rate is 10.56, which represents a drop of .1 from the previous year. Thank you! That was a good start. However, once you factor in that private property assessments went up 2.5% last year and business property taxes were raised 50%, it is easy to see that CBJ is still collecting more property taxes than the previous year.
A portion of the mill rate, 1.2, is for general government debt service. Said another way, to pay off our city loans. We currently have over $6 million in debt to pay off this year. Why not use some of that fund balance to pay down our loans and then reduce the mill rate even further, lowering property taxes for everyone?
When it comes to CBJ taxes, inflation and the high cost of living in Juneau, our families are tired of being told to “Suck it up, Buttercup”. Enough. Help us out here Assembly.
Jerry Nankervis is a former two term CBJ Assembly member. Columns, My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire. Have something to say? Here’s how to submit a My Turn or letter.
