By WIN GRUENING
City and Borough of Juneau (CBJ) residents hear a lot from city leaders about the importance keeping their community affordable. However, far too often, the actions and priorities of elected officials instead make Juneau less affordable.
Taxpayers have taken notice and a local citizen’s group is gathering signatures for three initiatives designed to rein in Assembly spending and make Juneau more affordable. The three initiatives filed are:
- An initiative setting a property tax rate cap of nine mills
- An initiative exempting “essential food” and residential utilities from local sales taxes
- A charter amendment requiring all local elections to be poll-based
In my two previous columns, I explained why repealing mail-in voting and implementing a sales tax exemption on basic necessities promote community affordability. This column will discuss how a property tax cap, in combination with the other two initiatives, can lower the cost-of-living and make Juneau more affordable.
To be fair, affordability hasn’t been completely ignored. Affordable housing and childcare have been among CBJ municipal priority lists for years. Both programs receive millions of dollars each year. But it remains to be seen whether these sizable expenditures have significantly moved the needle by permanently lowering housing and childcare costs and increasing availability
What businesses and homeowners have seen is unchecked spending by the city assembly for discretionary projects and initiatives, some having been rejected by voters, which will make Juneau less affordable.
Millions every year are handed out via “Assembly grants” with no accountability measures attached.
Millions of dollars have also been sequestered or spent for mail-in voting, proposed city offices and a massive new arts and culture “civic” center. Questionable tax exemptions remain on the books while basic necessities like groceries and utilities are fully taxed.
If investing in these priorities resulted in meaningful private sector growth and more affordable outcomes, that would be laudable. But that hasn’t happened, and it is unlikely to happen in the future.
Juneau’s cost-of-living is negatively impacted by a variety of factors. But the two most significant are lack of economic growth and rising municipal taxes. Yet, government entities seem ill-equipped to recognize that economic expansion and lowering taxes are the two most powerful strategies that can significantly enhance a community’s affordability.
The CBJ Assembly’s most recent approval of the Aak’w Landing cruise dock project is a long overdue and most welcome step in promoting economic growth in the community.
But the other half of the equation, equally as important, is controlling property taxes that fuel municipal spending. Moderating taxes, particularly property taxes, directly reduces the financial burden on business owners, homeowners, and families, making it easier for them to manage their finances.
The combined effect of economic expansion and lower taxes is particularly potent. As businesses expand, adding to the tax base, more jobs are created, wages increase, and more housing is built to meet demand, all of which helps keep prices in check and increases the supply of housing.
A cap on spending is necessary for this to happen. No doubt, city officials will respond to the initiative with predictions of dire consequences, should this pass. We will hear that city services will be cut (not grants or discretionary projects), and everything from schools to parks will suffer. Nonsense.
The existing basic property mill rate is 8.96 plus 1.08 mills for debt service equaling a total of 10.04. The proposed 9 mill rate cap is above the current mill rate and will not affect current expenditures. Debt service is not limited by a property tax cap. The city may still float additional bond issues as necessary for worthy projects when needed, but they must be approved by voters.
Tax revenues will rise organically with inflation since they are tied to property tax assessments. If the economy grows, tax assessments increase, as will total property taxes. If the economy is contracting, the tax base will decrease, constraining expenditures and limiting budget increases.
Essentially, a tax cap acts as an automatic control on discretionary spending and gives voters say in how their tax dollars are spent.
Juneau voters who believe community affordability is a priority should sign these petitions and then make an informed choice on election day in October.
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.