By PETER J. CALTAGIRONE
I respectfully submit that conservative voices in Anchorage should consider refocusing their priorities. In the months preceding Anchorage’s recent election and voluminous debate over the 2018 Anchorage municipal ballot measures, I grew frustrated by the myopic focus of my fellow conservatives advocating for Proposition 1, the “bathroom bill,” while speaking out very little, if not remaining completely silent, about the fiscally irresponsible ballot measures voters were asked to approve.
I don’t stand in judgment of anyone who voted for Proposition 1; rather I suggest that we re-focus our advocacy efforts toward issues of broader consequence.
Seemingly absent from debate was the $98 million in new bond debt Mayor Berkowitz and the Assembly asked Anchorage voters to approve. The voters showed up in record numbers this year and passed all bonds, many by large margins. The left, which currently controls the Mayor’s office, Anchorage School District and Assembly, are passing larger and larger budgets while pushing routine obligations that should be budgeted for, like maintenance, into bonds. Voters are then told that if they don’t approve the bonds, they don’t support schools and parks.
Where are the conservative voices to counter this narrative?
To review, seven propositions sought voter approval for new general obligation and school bonds. This new debt doesn’t exist in a vacuum; it further burdens an already heavily-leveraged tax base. Here are some numbers to consider as this plays out in the coming years:
Despite a continued net decrease in Anchorage’s population the last five years, the budget for the Municipality increased over $11.5 million from 2017 – 2018 to $520.5 million, the highest in Anchorage’s history. Annual debt service on currently outstanding general obligation bonds makes up 11.4% of the 2018 Municipal budget, or approximately $59.3 million.
In addition, the Anchorage School District’s 2017-2018 budget burdens Anchorage taxpayers with annual debt service of approximately $39.2 million. (This number doesn’t include the $43.4 million in annual debt service payments paid from state sources.) Because voters approved Proposition 2, the ASD now adds $50.7 million in new debt to its current debt obligations. This new debt is solely borne by Anchorage taxpayers. Most of Proposition 2 involved roof repairs to Anchorage schools. Although I’m a strong supporter of education, I question why these items are being separately bonded instead of included in the annual maintenance budget for ASD.
Propositions 3 through 8 involved new bond debt for Municipality projects totaling $47.3 million. The bulk of this new debt approved by voters was in Proposition 3, which sought approximately $33.9 million for capital improvements. The other propositions were for bonds between $1 – 4 million for parks and public safety-related projects.
However, the new debt obligations now facing Anchorage taxpayers are not limited to $98 million. Recall that in December, the Assembly approved Mayor Berkowitz’s plan to incur an additional $68 million in new pension-related debt, creating a $6.4 million dollar annual debt-service liability for the next 15 years. Now that voters passed Propositions 2 through 8, these bonds will add an annual debt-service liability of approximately $8.52 million. These payments can last up to 20 years.
In sum, the cumulative, annual debt service liability to Anchorage taxpayers will increase from approximately $98.5 million to $113.42 million. Further, our individual share of these obligations is growing because the Anchorage tax base is shrinking when you take into account the net migration of people and businesses out of Anchorage.
Exacerbating the problem, Proposition 11 sought to lure homeowners into paying lower property taxes, at least temporarily, through a higher property tax exemption. Not surprisingly, it passed overwhelmingly because voters were not given the full story. Since the Municipality’s budget and debt burden is increasing, Newton’s Third Law applies; every action has an equal and opposite reaction. Proposition 11’s reduction in tax revenue has to be reconciled somewhere. One possibility is future adjustments to the mill rate that would effectively eliminate the reductions to a homeowners’ tax liability.
A more immediate possibility is the tax burden may simply get shifted to commercial properties, including rental properties. If you rent an apartment or own a business in Anchorage, you will pay materially higher rent or taxes, respectively. Our business community is already stretched thin by a recession, high costs and a declining population. Goods and services, already at a premium in Anchorage, will only get more expensive as these increases get passed through to consumers. This may ultimately affect jobs as well.
Anchorage taxpayers already pay a high amount in property tax as a percentage of home value compared to national averages. Property taxes can only match the climb of our ever-increasing budget and debt burdens to an extent. As a tax base, we are rapidly approaching the point where continued increases in property taxes are no longer sustainable.
Other taxes will soon become necessary; we have already seen this with the new Anchorage gas tax implemented in March. If other debt-laden cities are an indication of things to come, we risk implementation of a sales tax and/or a municipal income tax. These new taxes will burden everyone.
Many Anchorage voters are simply unaware of the significant, long-term implications our increasing debt load has for them. Additionally, in the context of bond measures, the average voter fails to question why these maintenance items are being bonded for when the time for repairs and maintenance is nigh, not planned for in budgets. It is our job to educate voters in a persuasive, non-polarizing manner. As conservatives, we are supposed to be the bulwark against reckless borrowing and spending; we should spend our political capital accordingly.
We need to be better advocates for sound fiscal policy. We need to be the leaders who demonstrate that support of schools and responsible budgets are not mutually-exclusive. People can relate to these basic concepts from their own personal budgets.
It’s time to run a cost-benefit analysis in how we choose to brand ourselves as conservatives. Let’s not use up our political capital pushing measures like Proposition 1. If it passed, Proposition 1 would not have advanced public safety in any measurable amount. Transgendered individuals make up only 0.6% of the national population and the behavior most conservatives were worried would occur is already, has always been, and will always be illegal.
On the contrary, refocusing our efforts on issues of broader consequence will pay dividends. We should market our fiscally conservative principles so voters better understand the real consequences of irresponsible budgets and debt burdens. These issues affect everyone. A return to responsible budgets will have real, measureable results for Anchorage’s economy and allow for investments in public safety that can help arrest our rising crime rates.
Let’s keep our eye on the ball. Together, let’s refocus our advocacy toward the benefits fiscal conservatism brings the everyday voter.
Peter J. Caltagirone is an Anchorage resident, property owner and trial lawyer licensed in five states, specializing in Oil & Gas-related litigation.