Win Gruening: Juneau’s budget balancing act is actually not that hard to do

By WIN GRUENING

For those of you tired of reading about Juneau’s municipal budget, my column this week will not provide any relief.  But for those interested in Juneau’s city finances and how Juneau taxes may increase, it may shed some light on how their budget process is progressing.

The Juneau Assembly began budget deliberations facing a projected $3.4 million deficit, after they proposed raising taxes on property owners who already are struggling with huge tax assessment increases in the last two years. 

To help residents to understand this better, city staff recently published an online budget simulator that provides an opportunity for anyone to  formulate their own city budget and submit it to the Assembly.  Dubbed “The Balancing Act”, the simulation tool allows residents to make budget suggestions as well as learn more about Juneau programs and the trade-offs between providing city services and fiscal stability. Users can also save their work and share it with others who can also edit it before submitting it to the Assembly.

I spent about 30 minutes experimenting with it, and, without raising taxes or requiring the use of savings, I was able to balance the budget.  

Regrettably, that does not seem to be the direction in which the Assembly is headed.

In a previous column, I outlined some of the challenges in fashioning a budget. Facing a multi-million-dollar deficit, a stagnant economy and population, declining school enrollments, and the expiration of federal and state pandemic support, the Juneau Assembly has critical choices to make that will affect Juneau taxpayers for many years to come.

In spite of that, leading up to formal budget deliberations, the Assembly has focused an inordinate amount of time prioritizing and discussing pet projects that have questionable public support and will cost in excess of $100 million.  I am referring to the Capital Civic Center mega-project which is being estimated at around $75 million and the new City Hall at about $27 million. 

Neither project has a firm price tag and it appears that funding for the civic center project, at least, is being cleverly designed to avoid requiring voter approval. The plan is to cobble together a combination of grants from foundations,  the Federal government, and the city treasury.  Acutely aware that voters have previously declined to provide money for a major component of the civic center, the Juneau Arts and Culture Center, the Assembly’s funding strategy eliminates the pesky public from the calculation.

Perhaps backers of these projects think this is all small potatoes next to the $1.2 trillion in infrastructure spending Congress just approved.  But as pointed out in a recent National Review article, that money is going out to all 50 states and an untold number of localities – all of which are about to try to launch hundreds of large-scale infrastructure projects simultaneously during a period of runaway inflation, lingering supply-chain problems, price spikes in raw materials, a construction-labor shortage, and an unprecedented uptick in the cost of diesel fuel. 

What does this mean? This means that most of these projects will run well over their initially estimated cost. The New York Times observed last November that, “Cost overruns, engineering challenges and political obstacles have made it all but impossible to complete a major, multibillion-dollar infrastructure project in the United States on budget and on schedule over the past decade.” And that was when inflation was still relatively normal and manageable.

Even if construction funding for the civic center is finally obtained, it begs the question: what will the annual operating costs be to operate a facility of this size?  The inevitable subsidies, which could amount to millions of dollars, are essentially an unfunded mandate that will never receive voter approval but will eventually require higher taxes.

The Juneau Assembly is also considering adding a third project to this list, a new city museum which would be located closer to the cruise docks.  According to the museum folks, the current facility is old, too small, and needs to be more accessible.

Remember, now, none of these projects have been built, public support and costs are unknown, and yet the Assembly has already appropriated over $8 million to move the first two projects along.

Last week the Assembly deepened the deficit even further when it tentatively approved eliminating sales tax on food purchases.  They further proposed raising the city sales tax during the summer season from 5% to 6% to partially offset the $6 million hole that eliminating sales tax on food created in the budget. This won’t be good news for Juneau seniors who already were exempted from sales tax on food but now would pay a higher sales tax on everything else.

Which brings me back to the online budget tool.  If it’s possible to balance the budget without raising taxes, why isn’t that the Assembly’s goal instead of adding to the deficit this year and building projects that will increase the deficit even more in the coming years?

If there are enough legitimate online budget submissions, City Finance Director Jeff Rogers says the results will be compiled and shared with the Assembly Finance Committee.

This just might be a good way for Juneau residents to send a message to their elected Assembly members.

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.

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