By Dave Kiffer
May 04, 2010
I was surprised to read, in a recent letter to SITNEWS, that the borough property tax rate will go up this year because of the replacement pool project.
Last year, the Borough Assembly enacted one of the largest single year property tax rate cuts in borough history. The mill levy was lowered from 6.8 mills ($680 per $100,000 in assessed evaluation) to 6.0 mills ($600 per $100,000 assessed evaluation). Borough staff had recommended a cut to 6.5 mills but the Assembly went further because it felt staff had set a level of "reserves" that was higher than necessary.
Notice, I said the "rate" went down. With assessed values continuing to increase - as they are in every community in the state of Alaska - not everyone's taxes may have decreased as much as the mill levy did. I know that mine certainly did not. The only thing that the borough assembly has direct contol over is the mill levy and it clearly "controlled" it last year.
On top of that, earlier this year, the borough assembly voted to eliminate the business personal property tax, thus returning more than $300,000 to the taxpayers. The idea at the time was to replace that revenue with a tax on tobacco products. In the face of a significant amount of public opposition, the assembly chose not to enact the tobacco tax. But the loss of that tax revenue put further pressure on the budget. A large portion of the proposed mill levy increase comes from that cut, a mill levy increase which was encouraged by the vast majority of the public speakers who opposed the tobacco tax, by the way.
Staff has recommended the assembly increase the property tax levy up to the 6.5 mill level that it feels is the amount needed to sustain (not expand or decrease) borough services to the public. It will be up to the borough assembly to decide whether to raise the mill levy and, if so, how much. As always, the boro welcomes public comment. By law, the mill levy must be set before June 15.
Notice I have not mentioned the pool at all. That's because the funding of the pool has nothing to do with the current mill levy. The pool is funded by the 1/2 cent recreation sales tax that has been on the books for nearly two decades. It is not a new tax, nor it is going to increase. The sales tax will cover the long term bonds that the borough has purchased to fund the new pool.
Perhaps, the confusion is from the general discussion which took place at the assembly table during the pool discussion when it was noted that with every bond issue "the full faith and credit" of the boro is put on the line to guarantee the bonding. If the community suffers a cataclysmic economic meltdown at some point in the future, there is always a chance that property taxes would have to be raised to pay off all bonded indedtedness - of which the pool is only part of. I have too much faith in the future of Ketchikan to believe that will every happen.
When I was younger the worst case economic scenario facing the community was always the potential closure of the Ketchikan Pulp Company. During debate over the future of the pulp mill in the early 1990s, the words "economic cataclysm" were actually used to describe what would happen if the mill were to close. In 1997, when the mill closed, the borough responded by keeping the property tax stable the next year. Then in 1999, it ticked up slightly and has been generally "trending" downward ever since. Although there have been a couple of upticks over the past 13 years, the property tax is 1 mill lower today than it was when the pulp closed in 1997.
Even as we face a likelly decrease in our major industry, tourism, over the next few years, no one is suggesting it as being as "cataclysmic" as a potential pulp mill closure was once perceived to be.
Interestingly enough the current level of 6.0 mills matches the property tax levy of 1991. Even an increase to 6.5 mills would only bring the levy up to the mill levy of 1993. Have any of your other expenses gone back to the levels from those years?
Received April 29, 2010 - Published May 04, 2010
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