“We Are All in This Together.” We’ve heard that phrase repeatedly as we struggle to deal with this pandemic. The citizens of the City and Borough of Juneau have demonstrated great community resolve in dealing with the medical side of the pandemic and now it is time to demonstrate the same community resolve as the virus’ economic fallout becomes obvious.
The CBJ biennial budget submitted by the city manager April 1, 2020, recommended to the mayor and Assembly that they begin the budget process with the assumption of a property tax increase of nearly 10%. The Assembly should not now be raising taxes on residential and commercial property; in fact, they should be providing relief by reducing the property tax.
Here are a handful of reasons why there should be a property tax decrease: One, our debt is going down significantly and more money is available for the operating budget; two, our property assessments are going up; three, our sales tax receipts were much larger than projected so we have an unrestricted budget surplus of $18.2 million; four, our restricted budget savings reserve of $16.6 million can be used because of the significant unanticipated reduction in revenue, five, there is $53 million in federal CARES act relief money scheduled for Juneau.
The budget document pointed out that our general obligation debt service is decreasing significantly. School debt payment will decrease 8.8% in Fiscal Year 21 and 15.1% in Fiscal Year 22. Our general obligation debt is also being prudently refinanced at a lower interest rate whenever possible.
The CBJ’s property tax assessments rose over 2.02% last year and this year assessments are averaging another 2.4% increase pending appeals. Just using the current mil rate, our property taxes will be hiked without even considering the manager’s 10% proposal.
According to the “Macro CBJ Budget Balancing Concept Tool” that is being used to include public participation in building the budget, there is $18.2 million in the unrestricted CBJ general fund fund balance and in the CBJ restricted budget reserve, “Rainy Day Fund,” another $16.6 million. The Rainy Day Fund was established to ensure adequate resources in the event of an emergency or significant unanticipated reduction in revenues. It was set up also in part to permit orderly budget reductions and/or tax adjustments when funding sources are lost or substantially reduced. Both cash reserves can now be used. The conditions certainly warrant it.
What was unknown and wasn’t considered in the budget proposed by the City Manager was $53 million from the federal CARES Act relief money for Juneau from the state. There are several unknowns on how the money can be used but its arrival could certainly help cushion some of the economic body blows Juneau residents and businesses are experiencing.
The Assembly is diligently doing its homework, but the time remaining before June 15 is fast running out. In this current budget cycle, let’s restrict our funding to the basics in the budget, draw the unrestricted budget surplus of $18.2 million down to about $3 or $4 million, and use the $53 million of the federal CARES funds in the budget where possible, then tap into the Rainy Day savings fund of $16.6 million if necessary. This will give us the time needed to permit orderly budget reductions and further tax adjustments if needed with a clearer knowledge of federal and state support and restrictions and also a clearer idea of the community-wide impact of the loss of one of our primary economic drivers-tourism.
Many of Juneau’s 10,400-plus property owners will be dipping into their saving this September — if they have any saving left — to pay their property taxes. People are hurting now but, this fall could be much worse. Raising property taxes and subsequently raising mortgage payments is another blow for Juneau citizens burning through their savings and maxing out their credit cards just to survive. To provide some relief for the property owners in the CBJ, now is the time to reduce property taxes.
We have and need to maintain confidence in our leaders, ourselves and our future. The Assembly should send a clear message to the citizens of Juneau by providing property owners in the CBJ with a reduction in their tax burden and demonstrate that “We Really Are All in This Together.”
• Ken Koelsch was a teacher at then-Juneau-Douglas High School 1969-1996, port director U.S. Customs and Border Protection 1996-2014, served on the City and Borough of Juneau Assembly 1997-2003 and was Mayor 2016-2018.