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City, borough officials want financial plan

Posted: Friday, November 22, 2002

Concern that state lawmakers may again consider a statewide sales tax, municipal governments will keep a close eye on the 23rd Legislature and the administration of Gov.-elect Frank Murkowski, municipal officials from the Kenai Peninsula said this week.

Kenai Peninsula Borough Assembly President Pete Sprague, who is a member of the AML board of directors, and seven other members of the assembly, attended the Alaska Municipal League convention in Valdez last week, where they participated in adopting the AML's 2003 state legislative priorities list.

That list calls on the state to avoid depletion of its critical financial reserves by adopting a comprehensive economic development strategy, considering a reasonable state spending limit, and by continuing the search for new revenues other than a statewide sales tax.

"The one real focus we have is that we are really concerned about any sort of state sales tax," Sprague said, adding that a statewide tax would impact municipalities, which depend on sales taxes for their own revenue streams.

"If it comes up, there will be a lot of discussion," he said.

Kenai Mayor John Williams, a past president of the Alaska Conference of Mayors, said municipalities have been adamantly opposed to a statewide sales tax.

"That purview belongs directly to the cities," he said.

The AML's latest priorities list no longer includes a call for a statewide income tax as it did last session. With a new administration about to take office, the AML stepped back to give the Murkowski team and the new Legislature an opportunity to present their own ideas for closing the fiscal gap, Sprague said.

"We did need to do that," Sprague said. "We still need to explore finding new revenues, though. I would say the ball is in the administration's court, and that of the Legislature."

Williams agreed.

"We did not want to raise any red flags," he said. "Let the honeymoon ride, so to speak."

Also attending the AML conference, held Nov. 10-15, was assembly member Betty Glick, of Kenai. Glick was elected to be the AML's representative to the National Association of Counties.

Glick said an attempt was made this year to make AML positions "as generic" as possible so they would apply broadly to all cities and boroughs.

She agreed with Sprague and Williams that AML wants to give the new governor and Legislature a chance to propose their own programs. But she said AML wouldn't sit by forever.

"This is just my opinion, but I would suspect that after one year, we may get a little more direct in some of our policies," she said.

She noted the appointment of Cheryl Frasca to be Murkowski's new budget chief. She said Frasca, who currently works on budget matters for Mayor George Wuerch of Anchorage, is well aware of the impact state budgets can have on municipal finances. That awareness, she said, may be a good thing.

Williams said one issue he raised regarded possible impacts of a future gas pipeline project. Voters approved a ballot measure calling for creation of the Alaska Natural Gas Development Authority by almost two to one. Williams said if the state creates a development plan, it should provide a way for local governments along a pipeline's path to tax it or receive government payments in lieu of taxes, so-called PILT funds.

"If we have to suffer the consequences of another pipeline boom without being able to benefit from taxation of the industry, it will bode very poorly for us," he said.

While in Valdez, assembly members met and discussed issues of mutual interest with officials of other cities. It was a good chance to network, Sprague said. For instance, he said he met with Juneau Mayor Sally Smith and discussed hospital expansion. Bartlett Regional Hospital currently is looking to expand, as is Central Peninsula General Hospital, Sprague said.

He also said he talked with Matanuska-Susitna Borough Mayor Tim Anderson about ongoing zoning issues there.

"We are largely dealing with the same issues," he said.

Other legislative priorities adopted by AML members included a call for the recreation of a Local Government Agency within the executive branch, something called for in the Alaska Constitution.

Bob King, press secretary to Gov. Tony Knowles, said the duties of such an agency are performed by the Department of Community and Economic Development.

AML members supported a "Millennium Investment Plan," basically a $1 billion effort to construct, repair and maintain roads, trails, ports, harbors, airports, schools and bridges statewide.

The league also set its 2003 federal legislative priorities list, which called for more resource development, support for the millennium investment plan, continued funding of the Denali Commission and revenue enhancement measures such as increasing PILT funds to offset the cost of providing local services to federal lands and facilities. The AML also wants the federal government to clear the way for collecting local sales taxes on out-of-state sales over the Internet.

"The municipalities are, by and large, in line with each other" on these issues, Williams said.

Kevin Ritchie, executive director of AML, said members emerged from the conference approving a policy statement about 70 pages long.

"As bills come up, it will give us a basis for talking about the municipal interests in those bills," he said.

Ritchie said the AML would be watching the Legislature with regard to revenue sharing, and property and sales taxes.

One idea not now part of the AML's legislative policy paper is one that's been kicked around for several years. Williams attributed the idea, called a community dividend program, to former Gov. Wally Hickel.

Under such a program, Alaska Permanent Fund Dividend checks to individuals would be reduced, say from $1,500 to $1,000. The extra $500 would go to local governments to help pay for infrastructure -- libraries, pools, hockey rinks and the like.

Williams said if municipalities can convince the Legislature that it is an idea worth trying, he'd like to see a ballot measure presented to voters.

Alaskans have shown a clear reluctance to hand over to state lawmakers any part of their annual dividends, arguing people know better than government how to spend that money.

Would that be any different if it were local government in line to spend a portion of each year's dividend?

Williams thinks it would.

"People are constantly coming to local government and saying, 'Why don't you build a new pool, a hockey rink, a library?'" he said. "Those are all things we can't do without a large amount of cash."

But a community dividend such as presented above would supply about $3.5 million a year to the city of Kenai, Williams said. That kind of money could go a long way over the course of decade or so to erecting the kinds of facilities the community has long desired.



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