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Rebuttal To Consolidation: What they don't want you to know
By Glen Thompson


June 29, 2006

I feel it is imperative that I rebut the allegations made by Lt. Dial in his article Consolidation: What they don't want you to know, June 26, 2006.

Mr. Dial's letter is quoted in black, rebuttal in red:

With the consolidation vote quickly approaching, supporters have been surprisingly quiet. Perhaps it because discussion of the true consequences of consolidation is something they would prefer you not think about.

The Ketchikan Charter Commission has been anything but silent. We have conducted public, televised meetings and have had extensive press coverage for the past two years.

The following information is completely true, and is based upon a review of the Current Consolidation Document (over 200 pages long), October 2005 amendments to the Consolidation Document, State Statues, and news archives.


  • Consolidation will increase the property taxes of every family on this island. The current consolidation document states: areawide (City residents included) property taxes were projected to be increased by 2 mills to pay for expected increased costs relating to retirement and insurance.

This statement is taken out of context. The original budget had no tax increase but the City demanded that we include the expected effect of the $5 billion under-funded liability for state retirement plans. This liability is there regardless of consolidation and it amounts to about $2 million combined between the City and Borough, which is equivalent to 2 mils. We added the projected expense and the necessary taxes to our original budget. This is, however, a projection. Actual figures may be quite different, and since the KCC did not have the liberty of utilizing reserve funds, the actual budget could be quite different than the projected budget.

  • Consolidation has NEVER in Alaskan history resulted in lower Government spending.

We are the first to admit that cost savings are minimal due to our attempt to keep status quo on government services and allow a new sitting assembly the latitude to set the budget. The true benefit of consolidation lies in unity.

  • The services provided by the KGB and the City can be consolidated, without consolidating the Governments. In fact, many communities throughout the State currently have Memorandums of Agreement with each other to share governmental expenses.

This statement would be true if the bodies had similar functions and did not compete for limited state and federal resources. History shows that the two bodies have an extremely hard time agreeing on priorities and the result has been rancor and hard feelings.

  • Consolidation supporters are pushing consolidation with buzzwords such as "More efficient Government", please understand that this does not mean "Lower Cost". Think of it this way.Its like spending $4000 in bank fees refinancing your house to save $2000 in total interest payments. The money that Consolidation saves will be offset many times over by new, increased, and additional costs.

This is a silly and inflammatory example. More efficient means we would be unified and cohesive rather that divided and argumentative.

  • The estimated savings due to consolidation have decreased nearly 100% since the last (2000)-consolidation attempt. The costs of consolidation far outweigh any potential savings. A vote to consolidate does not guarantee that even a single dollar will be saved or that there will be a net loss of even one employee. This document does not bind the new consolidated government to save money, or reduce the number of governmental workers.

Actually the projected cost savings have decreased 45% to about $500,000 per year mostly because our current petition did not cut travel, training, audits, dues, supplies, etc. KCC did not attempt to cut combined staffing beyond the obvious duplication which is primarily at the executive level.

  • The consolidated borough will initially collect $115,273 more in property taxes, yet will still have to raise your taxes.

Same comment as above regarding 2 mil tax.

  • This statement is inserted in several places in the Consolidation Document that you will vote on: voter approval will be deemed to have been granted upon approval by those voters required for such measures during the consolidation election. Translationif you vote for consolidation, government can assume that you approve of any subsequent changes to the specific areas mentioned in the Consolidation Document and can implement them if desired, your future approval is not necessary.

What it actually means is that the proposed areawide tax structure is approved if consolidation is approved. This means the 1% Hospital tax is extended areawide, along with creating a uniform transient occupancy tax (bed tax). Property tax rates have to be set annually like they are now. In general, any increase in taxes requires a super majority vote (5 of the 7 members) of the elected Assembly.

  • Currently the Ketchikan Gateway Borough is a 2nd class entity. As a 2nd Class Borough, Alaska Statue (AS) 29.45.590, limits the maximum amount of taxes that can be imposed, and requires a vote of the people, prior to any new taxes. THIS IS WHAT WE HAVE NOW.

This statement is somewhat misleading. Sales taxes currently require a vote of the people in the 2nd class borough (not in the city), property taxes, however, are set by both the city council and the borough assembly annually with no vote of the people.

  • The Current Borough Tax Cap is 8 Mills ($1600 per 200k) New Upper Tax Limit if Consolidation passes "30 Mills" ($6000 per 200k), see Alaska Statue 29.45.090. If you think that your taxes will not rise under consolidation, keep in mind that the original consolidation petition contained a 10 Mill tax cap, (20% increase over the current cap), but was removed because the City wanted to retain the ability to increase taxes to the State imposed max of 30 Mills.

There is a "property tax cap" in the borough. It was set by vote of the assembly and can be revoked by a simple majority vote, so it is pretty worthless. Under state law, property tax cannot exceed 30 mils. There are many reasons why the tax cap in the original petition was ultimately found deficient, however in its place we actually increased the hurdles that an assembly must overcome to increase any tax, not just property tax. Instead of a simple majority that is currently required, the new charter requires a 2/3 majority of the total Assembly to raise taxes.

  • If consolidation passes, the Ketchikan Gateway Borough will merge with the City and form a Unified Home Rule Municipality, just like Anchorage and Juneau.

Consolidated municipalities differ from unified ones. The City is currently a first class, home rule city. The new borough would be the same. It means that it is governed by a charter rather than simply defaulting to state law which governs 2nd class communities. A unified home rule municipality is another entity altogether.

  • Unified Home Rule Municipalities are the highest taxed locations in the State. A review of the Alaska Housing Finance Corporation 2005 Report, shows that Anchorage had the highest and Juneau the second highest average home sales price. This fact, combined with the higher mill rates translates into the following average tax burden per household. Anchorage $4697, Juneau $3369, Ketchikan $1534. (Figures based upon the median avg. sale price of homes (2004/2005), and the communities avg. mill rate (individual rates in most cases are higher due to bond debt and other factors). SUPPORTERS WANT KETCHIKAN TO BE JUST LIKE ANCHORAGE & JUNEAU.

Again, the consolidated government in Ketchikan is NOT going to be a Unified Home Rule Municipality. Higher home sales prices translate into higher assessed value and thus higher property tax revenues. Also, while Anchorage has a high property tax rate, they have no sales tax, so a direct comparison is moot. Juneau already has a property tax and sales tax rate that is similar to Ketchikan's.

  • Unified Home Rule Municipalities (what we will become under consolidation) are more expensive to taxpayers for a number of reasons. One such reason is the transfer of responsibilities / costs, from the State to the local level. One expense that WILL transfer to the newly consolidated government is public safety funding, e.g. State Troopers.

Lt. Dial is again taking items out of context. The state of Alaska is on record stating:

"In response to your letter of September 3, 2004, I can offer the following assurance;
The proposed consolidation of the Ketchikan Gateway Borough and City of Ketchikan would not result in the Department of Public Safety withdrawing assets from Ketchikan.
However, there have been discussions over time regarding potential legislation that could require municipalities to provide certain services. Clearly, public safety services could be a part of such legislation.
At this time, I see no adverse impact that should concern you as you consider consolidation of governments. I believe that our pending purchase of new office space in Ketchikan is a clear sign of our investment in the community."

Any potential legislation that could require municipalities to provide certain services would have the same effect regardless of consolidation. In any event, given that the AST has spent millions on its new facility in Ward Cove; that Ketchikan is the hub for commerce, communication, transportation, and medical care in SE Alaska; that Ketchikan is a border town and seaport; it is highly unlikely that the troopers have anywhere better to locate.
Further, the consolidated government in Ketchikan is NOT going to be a Unified Home Rule Municipality.

...Still not convinced that Consolidation is a bad idea? Consolidation will also negatively effect our senior population.

The Consolidated Governments of Juneau and Anchorage, have both worked toward elimination of tax exemptions for seniors. Both communities view senior tax exemptions as unsustainable and unfunded liabilities. As previously discussed, consolidated / Unified Home Rule Municipalities are far more expensive than our current form of Government. If consolidation passes, you can expect the newly formed government to do exactly what Juneau is doing RIGHT now; elimination of senior tax exemptions. The following articles can be viewed in their entirety by going to the Juneau Empire website..

This is pure speculation. The state would have to pass legislation to eliminate the property tax exemption. It is an unfunded mandate by the state and not popular with any property taxing authority since they regard it as lost revenue. It has absolutely nothing to do with consolidation. Sales tax exemptions fall in the same category; they are subject to the whim of the respective elected bodies.


Most, if not all, of Lt. Dial's reasons for not supporting consolidation are not related to consolidation at all. Currently, in fact, property taxes locally could increase to 30 mils with a simple majority vote (4 of 7) by the assembly. The real issue here is local control over our government and fewer "politicos" to deal with who would actually vote to raise our taxes. Having two governments that often work at cross-purposes with each other is irrational for 13,000 people on an island.

Glen Thompson
Ketchikan, AK - USA


About: Glen Thompson is Chair of the Ketchikan Charter Commission, Borough Assembly Member and Citizen of Ketchikan.


Related Viewpoint:

Consolidation: What they don't want you to know By Rodney Dial - Ketchikan, AK - USA



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and do not necessarily reflect the opinions of Sitnews.


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