By WIN GRUENING
During recent deliberations, Juneau Assembly members reviewed a list of pending projects that have been submitted for financial support in the near term.
City Finance Director, Bob Bartholomew, outlined one-time capital improvement and grant requests totaling between $34 million and $85 million depending on how the state budget picture finally shakes out, as well as a $5 million hit to CBJ’s annual operating budget that needs to be addressed.
Most Alaskans are focused on state budget battles, so it’s easy to lose sight of the impacts on municipal budgets downstream. Indeed, our local governments should proceed cautiously before making any large new non-essential financial commitments. No one knows what the new budget landscape will look like, but our city leaders should be prepared to deal with a range of scenarios.
This set of circumstances has highlighted the amply publicized new Juneau Arts and Culture Center which has formally requested a $7.5 million grant from the city – to be funded by transferring $4.5 million in sales tax proceeds previously approved for Centennial Hall convention center and adding $3 million from undesignated sales tax revenues. This is in addition to a 2012 $1 million city grant and the donation of city land for the site in the Aak’w Village District.
Proposed originally as an $18 million joint venture between Perseverance Theater and the Juneau Arts and Humanities Council – not needing further public financial support – the project has ballooned in cost, and now requires a substantial infusion of public money. Here is why:
- In 2015, Perseverance Theatre withdrew from the partnership citing financial constraints.
- In 2018, a $12 million general obligation bond proposal for the project failed to pass the Assembly.
- After several years of fundraising, the project (re-labelled the New JACC) failed to attract enough donations and has only managed to raise $5.5 million, 21% of the now increased $26.4 million cost.
Now, New JACC backers insist the city provide $7.5 million to add to existing donations thereby demonstrating to potential donors a 50% local commitment towards the estimated cost.
The question remains. In these uncertain times, should government expend precious dollars on (or raise taxes to fund) non-essential proposals when it’s clear there are major financial obligations looming that take priority?
Aside from the New JACC, the largest immediate expenditures facing the city are necessary major school maintenance costs (mostly school roof replacements) ranging between $11 million and $46 million and Centennial Hall upgrades of between $5 million and $10 million.
Bartholomew also presented a list of possible ways to pay for some of this. Unfortunately, very little of it would come from budget reductions. Most of it would presumably come from four main areas:
- Surplus sales tax revenues over 4 years ($4 million)
- Depletion of reserves ($4 million)
- Hotel tax hike of 5% ($12.5 million)
- Expansion of municipal debt repaid through property taxes ($28 million)
Despite the enormity and uncertainty of potential budget hits and how they would be funded, the Juneau Assembly introduced several ordinances this past week – possibly granting up to $7.5 million for the New JACC and authorizing up to $10 million in a 15-year general obligation bond for Centennial Hall. Also introduced was a companion ordinance hiking the hotel/motel tax by two percent to partially offset costs of Centennial Hall improvements.
These preliminary measures, in their final form, are scheduled for a public hearing and Assembly approval on August 19. The bond proposition and the hotel/motel tax increase must be approved by Juneau voters. An advisory vote on the New JACC funding would also be on the same ballot in October.
The Assembly apparently thinks it prudent to commit substantial funds to a new performing arts center before concerning itself with the possible need to fix leaky school roofs.
The vast amount of time the Assembly and city staff have invested in placating New JACC proponents has detracted from serious economic development efforts needed to grow Juneau’s population and job base.
How will increasing sales or property taxes or raising taxes on independent visitors improve Juneau’s economy in the future?
Whether the Assembly’s priorities match those of Juneau voters in October remains to be seen.
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.