Is new Juneau debt a good idea? - Must Read Alaska
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Tuesday, January 19, 2021
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Is new Juneau debt a good idea?

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By WIN GRUENING

In recent years, Juneau’s Assembly has disregarded voters’ wishes on sales tax and bond issue propositions. One need only look at the approved funding for Centennial Hall repairs and upgrades which has not been utilized and remains unspent today.

With the city now facing an estimated $18 million in needed Centennial Hall renovations, $4.5 million in sales tax money was approved by voters for improvements in 2017. Last year an additional $7 million in bonds for our convention center were approved.

In that same election, a measure to re-direct the $4.5 million of sales tax for Centennial Hall to fund the New JACC project was soundly defeated, even though the Assembly had voted unanimously to put the request on the ballot.

Now the Assembly seeks voter approval for a “bundled” bond proposition of up to $15 million with roughly one-third of the money going to each of three areas: fix school roofs; capital improvements to parks; and repairs to streets and buildings, and energy efficiency projects.

Use of bond proceeds are typically delineated in more detail so voters can decide whether the expense and resulting property tax increase is warranted. Roof repairs for specific schools may be worthy of support, but two-thirds of the $15 million are not specifically defined.

This does not provide the kind of transparent information for voters to decide if these projects are indeed “critical.”

Part of the rationale for taking on new debt is to get people working by putting $15 million in projects on the street. The Assembly foresees significant economic benefits – with direct and indirect impacts of over $21 million (based on an estimate from McDowell Associates).  This, however, assumes that most labor and materials could be locally sourced – a issue that hasn’t been researched.

If getting people to work is so imperative, why hasn’t the $11.5 million for Centennial Hall (approved in 2017 and 2019) been utilized? What is the hold-up?  

As to timing and the possibility of alternative funding, there are some important issues to be considered. 

As outlined by city staff during budget deliberations, Juneau initially faced an estimated $35 million shortfall caused by the pandemic and cancellation of the cruise season. While this figure has shifted over time, $53 million in federal CARES Act funding has significantly offset this shortfall. 

Currently, after using CARES monies as economic stimulus in the form of loans and grants to businesses and organizations, as well as paying for Covid-related public safety expenses, there is an estimated $10-12 million that remains uncommitted.

Under current federal guidelines, uses for these funds are restricted to Covid-related impacts and must be committed prior to December 31, 2020.  However, there are several bills pending in Congress that would lift these restrictions, giving CBJ the ability to use these funds where they see fit.

While Congress is deadlocked on these CARES funding revisions now, there’s a reasonable chance for approval later this year.  

Once the Assembly has satisfied its obligations to fix leaky school roofs, could it be hoping that, if CARES Act funding is no longer restricted, the resulting windfall would justify additional funding for the New JACC not requiring voter approval?

If CARES monies do become available and the $15 million bundled bond package passes on October 3, voters would have unnecessarily raised property taxes, when by waiting, this could have been avoided.

There are any number of projects that should have a higher priority for public dollars than some favored by the Assembly recently.  Solid waste disposal, the relocated Glory Hall, and West Douglas Pioneer Road extension are but a few deserving of support.

The question remains: Why is the Assembly promoting additional city debt for projects that remain largely undefined?

And it’s fair to ask why Juneau residents should vote to add new debt now if alternative funding sources may be available.

Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.

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Latest comments

  • The only way Congress is going to get out of there gridlock on the stimulus money is if the dims scale back their pork.

  • I’ll bite. What’s Centennial Hall?

    • Basically, a small convention center. If you want an event with over 300 people attending, it’s our only option.

  • Why has CBJ decided not to “go after” tourist businesses that collect CBJ sales tax every day during the entire summer season AND THEN fail to remit these collected sales taxes to Juneau? It seems to me that CBJ would have considerable, additional monies if all sales taxes collected were paid.

    • Bravo – spend the time and effort to (re)claim what is rightfully due the CBJ coffers first !! Fiscal responsibility is now, more than ever, a mandate that our city elected officials (both current, hopefully some new) must meet.

  • In this current time of worldwide turmoil and few certainties, all representatives of the people should be observing their fiduciary responsibility to protect the people and their assets, to the best of their ability, or face personal liability for wrong actions taken. Take on no new financial burden before we know what is going to be happening two weeks, two months, two years from now. Debt ‘service’ never stops.
    The financial damage done to people, businesses, industry, food production, etc. will not be gone when we wake up tomorrow. It will be focused like a laser on people, businesses, and administrations, large or small, foolish enough to take on more debt before settling existing debt. The endless deep pocket of taxation is a fantasy. Many citizens of Alaska and the entire country are at the teetering point of financial ruin. The sensible thing for those ‘in power’, is to pay current obligations to the best of our current, known ability, get rid of unfunded liabilities, shrink spending to a sustainable level. Start back with a realistic spending outlay that never exceeds real income. Do it like people must do. Called ‘balancing’ the budget. Sooner or later you have to or lose it all.
    Pelosi must be still be getting paid. Right? “Blowout”, my rear quarter panel.

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