Win Gruening: Juneau Assembly kicks can down road

By WIN GRUENING

One might think with local outcries over the steep increase in commercial and residential property taxes this past two years, coupled with Juneau’s struggling economy, the City and Borough of Juneau (CBJ) Assembly would be looking for ways to ease the burden on local taxpayers. Instead, they seem to be doing just the opposite, funding pet projects in a variety of ways that will only serve to increase taxes.

On June 27, the Assembly met in a work session with two main items on the agenda, (1) selection of items to fund from the “temporary” 1% sales tax extension, and (2) whether to add a sales tax exemption for food.

During the first three hours of the meeting, assembly members debated dozens of priorities that would be funded with approximately $60 million expected to be collected during the five-year life of the 1% sales tax measure – should it be approved by Juneau voters in October. 

To Mayor Beth Weldon’s credit, she led an effort to reduce or eliminate items that had other funding sources or didn’t target specific projects.

One of the items of contention was childcare funding. Mayor Weldon made it clear that she preferred choosing capital projects and specific deferred maintenance items qualifying as one-time expenditures. While she was able to get childcare reduced by half from the original $5 million request, what remained is a significant departure from past CBJ sales tax measures. It effectively “locks-in” the operating expense of childcare in perpetuity so that it must be included in subsequent sales tax measures. Sneaking an operating expense into the budget in this way diverts taxes from more pressing needs and kicks the can down the road because it eventually must be funded from other sources.

The Assembly then moved on to the question of exempting sales tax on food.

This modification would create a $7 million hole in the budget. Without a long-term strategy for replacing the missing revenue, it’s doubtful that a majority of Juneau voters would approve it. Nor would they likely accept general tax increases without a rigorous review of on-going CBJ operating expenditures, which the Assembly seems unwilling to discuss.

Previously, assemblymembers decided to put an advisory vote on the ballot to determine the public’s views on the matter. But when faced with how to word the advisory vote, they waffled and decided instead to spend $30,000 on a survey or poll.

So the Assembly kicked the can down the road once again.

This is problematic. Questions on a survey can be asked a number of different ways to get the preferred answers. Indeed, one of the options presented to the Assembly was to ask the question this way: 

The Assembly intends on exempting food from sales tax. Would you prefer to replace the lost revenue by: (vote for not more than one) 1. Increasing the sales tax rate year-round? Yes [ ] 2. Increasing the sales tax rate seasonally? Yes [ ] 3. Increasing the property tax mill rate? Yes [ ]

Obviously, this doesn’t even give the person polled the option to object to the exemption. And it only allows three possible funding options.  What about a combination? What about canning the idea of a new city hall instead? What about reducing or eliminating other sales tax exemptions to help offset the revenue lost?

This last suggestion seems particularly appropriate and there are plenty of alternatives from which to choose.  One of the most glaring and obvious options is the exemption for non-profits from collecting sales taxes from customers on their retail sales. Why would we tax visitors and residents at most local stores but provide a competitive advantage to “non-profit” retailers like the downtown Sealaska Heritage store or the Discovery Southeast store at the Mendenhall Glacier Visitors Center by not charging any sales tax at all ?

Where is the equity in that?

The CBJ Assembly is again dodging the thorny issue of non-profit tax exemptions and kicking the can down the road with a survey that cannot provide the kind of context that is needed when weighing so many different options.

Assemblymembers have been elected to make difficult decisions – not procrastinate or hide behind a poll.

After retiring as the senior vice president in charge of business banking for Key Bank in Alaska, Win Gruening became a regular opinion page columnist for the Juneau Empire. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is involved in various local and statewide organizations.