If state shifts costs to municipalities, Juneau residents likely to see property tax increase

The Alaska Legislature is still in the process of deciding the fate of the school construction debt reimbursement program. If the State does not provide reimbursement, financial responsibility will be shifted to the municipalities.

“Our citizens should be advised that the most likely outcome of school debt shifting by the governor or legislature is a local property tax increase between 4.4% and 13.7% for the next 1, 5 or 10 years,” City Manager Rorie Watt wrote in an April 29 memo to the Mayor and Assembly.

For decades, the State of Alaska and local governments have shared the cost of major school construction. The program in Juneau is currently paying off debt incurred from projects like remodeling Auke Bay Elementary School and Sayéik Gastineau Community School. The state has been picking up 70 percent of the debt on these voter-approved projects and taxpayers pay the rest.

For this fiscal year, the Governor chose to eliminate funding, the House has chosen to eliminate half the funding and the Senate, so far, has chosen to provide full funding. Depending on how much debt is assigned to municipalities, CBJ could face an additional cost of $3.55 million or $7.1 million in fiscal year 2020, or up to $23 million over the next 5 fiscal years. When Juneau voters approved bonded debt for school projects, they agreed to pay the full cost if the State portion was not funded.

“By statute, the legislature created the School Construction debt reimbursement program as a means to encourage and leverage local investment and participation in school buildings, which are necessary for a system of public schools. The schools have been built and renovated, the money has been spent, the bills are due. The unfortunate consequence of year-by-year decision making by the State and the ensuing year-by-year uncertainty means that municipalities can’t rationally plan for the debt shift and the required tax increases,” Watt wrote.

For more information, contact the City Manager Rorie Watt at 586-5240 or [email protected].