Local governments condemn governor's budget amid frustration at lack of new revenues

Published: Feb. 21, 2019 at 9:02 PM AKST
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The Alaska Municipal League has strongly condemned the governor’s budget proposal for FY2020, saying it shifts costs to local governments and ignores a need to raise state revenues.

The governor’s proposed FY20 budget “significantly weakens the institutions that defines Alaska’s well-being and future prosperity,” said Nils Andreassen, the executive director of AML. “[It] pits programs and communities against one another, underestimates the impacts to Alaskans, and does not signal that Alaska is open for business.”

The pronouncement by AML comes after the 2019 Annual Legislative Conference was held in Juneau over the past three days.

Officials representing cities and boroughs from across Alaska gathered to discuss the budget’s potential impacts to local governments.

In a statement, AML wrote that the budget’s potential impacts to local governments include shifting costs to the local level with tax increases and the reduction or elimination of public services.

The organization would not say which of the budget proposals would have the most impact for Alaska’s local governments. Tim Navarre, who serves as a Kenai Borough councilman and the president of AML, said that the Petroleum Property Tax would impact boroughs on the pipeline corridor while changes to the Alaska Marine Highway System would impact the Southeast.

Gov. Mike Dunleavy’s press secretary Matt Shuckerow said that the administration is aware that big impacts would be felt across Alaska by the budget. He said with a $1.6 billion deficit, it will be essential for communities to be part of the conversation.

“Our message to Alaskans is not to stand down but stand up and contact your legislators about what you’re feeling, what you’re hearing,” said Shuckerow. He said that Alaskans were clear during the election about the need to tackle the state’s fiscal challenges and in their disinterest in increasing taxes.

In previous years, AML has supported the idea of a broad-based state tax to expand state revenues. There was frustration expressed by officials Thursday that the governor’s budget did not discuss new revenues and only dealt with expenditures.

During his budget roll-out, Dunleavy repeatedly said the state should have a balanced budget that is funded with existing revenues.

“The idea that you put a tax in place that solves everything doesn’t make much sense to me," Dunleavy said in a sit-down interview with Channel 2 just before the budget was released. "In the history of Alaska, once again, when we come into revenue, we spend it.”

When asked why AML supported state taxes but opposed a budget that could raise municipal taxes, Andreassen said “the cost shifting from one area of government to another is one thing, but it should be negotiated, and put in place over time.”

For many cities and boroughs that would choose to raise taxes, there would be limits to what they can do.

“We do have a tax cap and we're very close to that, so we don't have a lot of wiggle room through that source, we're going to have to be more creative,” said Haines Borough Mayor Jan Hill.

Navarre said the Kenai Peninsula Borough may not have a tax cap, but the organization is united against a perceived cost-shifting that would push local taxes to be raised.

As part of future budget negotiations, AML is calling for a rise in the municipal tax cap and the maximum level of education contribution by cities and boroughs.