by Rodney Dial
July 06, 2006
Thank you for your response to my recent letter. Your letter was well written, but lacking of facts to support your arguments. You instead crafted a document based on misdirection and emotional statements like "The true benefit of consolidation lies in unity". It would certainly seem that many of your statements supported my argument that a consolidated government is a more expensive government.
My original letter contained references to State Statues, law review, consolidation documents, links to websites and past news archives for a historical perspective. The only supporting documentation you provided was a single letter, which supported both of our arguments. As in my prior letter, this one will provide supporting documentation, but this time I will provide additional evidence to counter your attempt to paint consolidation as something it is not.
(#1) In your letter you claim that the Ketchikan Consolidation Commission (KCC) has conducted adequate public meetings, and provided sufficient information regarding Consolidation. Since this question is opinion based I propose the following:
"My argument is that KCC has provided only one side of the story, and is negligent in their duty to provide a balanced view of Consolidation".
I offer a challenge to Mr. Thompson and KCC to prove me wrong. Please utilize this public forum to provide the following information (please provide supporting documentation, e.g. news articles etc, also a direct answer would be nice) When since October 2005 (date petition amended) have you /KCC
Provided the one time costs of consolidation? e.g. cost to move employees, redesign websites, signage, letterhead, forms, cancel building leases (if any) renovate office space, purchase capital items, etc, etc. Please provide what this cost is estimated to be and where the funding will come from.
Provided the ongoing and future
costs of consolidation? For exampleis it not true that consolidated
employees automatically move into the higher of the pay ranges
of two previous governments? Also, isn't it true that a large
part of the retirement /insurance cost increase is a result of
KGB employees moving into a more expensive benefit plan? This
would be an added cost of consolidation and represents paying
more for the same services currently provided. How much will
this cost, and what are the other possible expenses?
I would argue
that KCCs failure to answer the aforementioned questions, and
provide supporting documentation is evidence that adequate public
notice has not been provided and that negative information is
being intentionally withheld.
(#2) My statementConsolidation 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.
Your reply was that.. The statement was taken out of context, and the increase was necessary due to increased retirement costs. I do appreciate two things about your response. One, you did not deny that taxes will increase after consolidation, and two, your remark that "the actual budget could be quite different than the projected budget". It appears that you put the words actual and projected in bold because you have reason to believe that your projected budget is overly optimistic.
Research into your reply included the following: Examination of KCCs 3 year projected budget (PERS adjusted), review of historical City and KGB tax rates, and research into the employer contribution rates from FY04 to FY07.
The following clip taken from the State website shows the retirement increase from FY06 to FY07.
1.2 (a) P.E.R.S. Contribution Rates For Fiscal Year 2007 Active Employers (continued)
Mercer Human Resource Consulting 6 State of Alaska Public Employees' Retirement System
181 Ketchikan, City of 31.72
As can be seen, the FY07 increase amounts to 2.91 City and 1.11 Borough. Taken in context with prior years, this increase is small. Between FY05 and FY06 the contribution rated increased by 16.8 City and 18.79 KGB. This large increase between FY05 and FY06 was absorbed by both the City and Borough while maintaining stable tax rates.
(source PERS Actuarial valuation Reports) http://www.state.ak.us/local/akpages/ADMIN/drb/pers/actuarial-valuation.shtml)
If KCC claims are true, that over a dozen employees will be eliminated due to consolidation, this would result in PERS savings (not including the increase). Additionally, the State Retirement System has been changed effective 7/1/07, so at least a few employees, hired between 7/1 and Consolidatoin will participate in a new 401k style system that is less expensive to local government.
So why can't the Consolidated government pay the increase without raising taxes?
These facts support one or more of the following assumptions:
1. That the projected retirement / insurance increase is LARGELY do to Consolidation. For example it appears that KGB employees have a far more cost effective benefit plan, which at least in part translates to the lower employer PERS contribution rate. Further, that upon consolidation these employees will be moved into the current City plan (or slightly modified one), translating into significantly higher costs, for the same employees, performing the same job +++A COST OF CONSOLIDATION+++ I am currently waiting for verification of this assumption from the State of Alaska, Division of Administration, Retirement and benefits section.
2. That the cost increase could be absorbed at least in part with the current tax structure, but KCC has intentionally factored in a slush fund (for lack of a better word) to help the new government fund the costs of consolidation, which KCC refuses to discuss.
3. That a consolidated government is a more expensive government.
Mr. Thompson, care to comment
on this? What is the cost to move employees into the retirement
system of the consolidated government? (just the upgrade cost
from consolidation please, actual evidence would be nice)
I would submit to everyone that if you are being told now, that the projected budget could be different, it's a sure bet that it will be.
#3 My statement.. Consolidation
has NEVER in Alaskan history resulted in lower Government spending.
You did not contest either
#4 My statement.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.
You replied.. Could if functions were similar, did not compete for limited funding and the governing bodies were able to get along.
Sir, your inability to get along with your counterparts is not acceptable and certainly not sufficient justification to consolidate. Your statement provided no evidence to support your claim regarding funding. Exactly what funding is KGB and the City competing for? And where is your evidence that funding to our island was any less because of our dual government system? Or would be any greater under consolidation (evidence please).
#5 My statement. If consolidation passes, the Ketchikan Gateway Borough will merge with the City and form a Unified Home Rule Municipality, just like Anchorage and Juneau.
Your reply..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.
I was incorrect in my statement that the Municipality would be unified, but correct in that it would be a Home Rule like Anchorage or Juneau. For the purposes of the upper limits of taxation my example was valid, and appropriate comparison was made. Even your own report to the LBC compared Ketchikan's newly consolidated government to Anchorage and Juneau. The below text was taken directly from KCCs Preliminary Report to the Local Boundary Commission on Ketchikan Local Government Consolidatoin:
The government would be a home-rule borough in which only one city government (the City of Saxman, a second-class city) would exist.
Some home-rule boroughs (e.g., the Municipality of Anchorage) make no provision for an initiative or referendum involving only a portion of the borough. Others (e.g., the City and Borough of Juneau)
#6 My statement.Unified Home Rule Municipalities are the highest taxed locations in the State.
Your reply was to argue that the newly consolidated government will not be a "Unified" home rule, but a Home Rule, that a comparison to Anchorage is not valid because they don't pay property taxes, and that Juneau has a similar tax rate.
The below definitions come straight from
Preliminary Report to the Local Boundary Commission on Ketchikan Local Government Consolidation
Borough means a general law borough (first class, second class, or third class),a non-unified home rule borough, or a unified home rule borough (unified municipality) (3 AAC 110.990(1)). In general terms, the word 'borough' means a place organized for local government.
"Municipality" means a political subdivision incorporated under the laws of the state that is a home rule or general law city, a home rule or general law borough, or a unified municipality (AS 29.71.800(13)).
Many of the definitions are used interchangeably and have only minor differences. Your focus on the word "Unified" was an attempt to deflect my point that Home Rule Municipalities, unified or not, are on average far more expensive to the taxpayer than the current 2nd class status of the KGB. For the purpose of the discussion of taxes both unified and non-unified Home Rule Municipalities face a top tax limit of 30 mills, and the public has no right to vote on new taxes, or sale tax increases.
#7 My statement.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.
Your reply was that.. There is a Tax Cap now but it can be revoked by a simple majority vote, so it is pretty worthless, you then go on to imply that the new charter is better because it requires a 2/3 majority of the total Assembly to raise taxes.
Am I the only one who sees
the contradiction of your statement? One is worthless because
it requires only a majority; the other is good because it requires
2/3rds ? are you serious? What is the differenceone vote?
#8 My statement.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. Translation if 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.
Your reply, in my opinion, affirmed my statement. I will leave it for the reader to decide. Personally, I would never sign a document that contained such as statement.
#9 My statementCurrently 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.
Your reply... 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.
It is not misleading; you simply did not read/understand my statement. I said "requires a vote of the people, prior to any new taxes". Property tax is not a new tax. A new tax could be something like.
The only reason Mat-Su voters do not have a current resource tax is because they have refused to give up their 2nd Class Status (What we have now). If we consolidate we loose the right to vote on NEW taxes, and the new government can institute new taxes as desired.
#10 My statement 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.
You reply you disagreed on the following points:
1. Any potential legislation that could require municipalities to provide certain services would have the same effect regardless of consolidation. Your statement is not correct. This has not happened to us because as a 2nd class borough, legislation affecting us, would/could affect other 2nd class boroughs. Currently there are 7 Second Class Boroughs in the State, most covering remote locations such as the Aleutians. Most of these 2nd class boroughs lack the resourses to assume resonsiblity to provide current State services.
2. You quoted a September 3, 2004, letter from Commissioner Tandeske (see prior letters for content) This letter supports both our arugements.
3. You stated your belief that the cost of the Ketchikan Trooper building and location makes it highly unlikely that the troopers have anywhere better to locate. Sir, you simply do not know what you are talking about regarding this issue. Take a look at the number of vacancies the Troopers currently have (statewide), and the communities that are fighting to maintain and get Trooper assets. Also, you should research how the State has closed/idled buildings, ferries, etc. which cost far more, with a simple stroke of a pen.
FINALLY and most importantly..here is the smoking gun, the proof that Mr. Thompson was simply withholding information when he implied that the transfer of State services to local control is a remote risk.
This is taken directly from the preliminary report on Ketchikan Local Government Consolidation. It is buried about 160 pages into the 2.7mb document.
Part 7. Whether the Proposed
Consolidated Borough Serves the Best Interests of the State
The above document is linked to the one below by 3 AAC 110.065. Pay special attention to section #(3)
These are the standards that the KCC has been working to satisfy for the last two years! The Local Boundary Commissions own standards state that they may grant the consolidation petition only if the proposal meets all applicable standards.
Mr. Thompson and KCC can deny/minimize this all they want, it is in their own REPORT.
Many view this as a blatant example of how the KCC is intentionally trying to deceive you. The State services that will be transferred to Ketchikan because of consolidation will pull millions out of our economy and require massive tax increases. All will pay significantly increased taxes (CITY RESIDENTS INCLUDED). Law Enforcement and the transfer of State Roads to local control (maintenance) are two prime examples services the State will relieve its self of.
#11 My statement 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 / 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.
Your reply.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.
My statement was correct. Juneau and Anchorage have, and are working to eliminate senior tax exemptions. Juneau is currently working to eliminate the senior sales tax exemption (I provided news articles supporting this). Anchorage has been pushing on and off, for the legislature to fund the property tax exemption, or exempt municipalities from the requirement.
This in fact has everything to do with consolidation. For those reading this, ask yourself thisAs long as we have two governing bodies can you ever see an instance in which they would both agree to eliminate the senior sales tax exemption? Of course not, it's politically impossible. In a consolidated government it is far easier, and Juneau is a prime example of this. The news articles I submitted in my last letter support my statement.
I thought I would end this letter with a overview of the proposed budget for the Consolidated government. By now I hope you realize that Consolidatoin is not about saving money.even Mr. Thompson admits to this. Its not even about containing costs, costs will escalate with the assumption of State services. Here are a few facts from KCCs own proposed budget.
Attached is interesting reading.
Steve Shrum, 5338 North Tongass, urged the Commission to avoid the pitfalls that occurred when the City annexed the Shoreline Area and to watch for those things in the consolidation process. He indicated since 2000, his tax bills had climbed 192.6% on his floating airplane hanger at 5811 North Tongass, his house appraisal went up 58.9% and the land adjacent to the floating hanger tax had increased 85.3% because of the Shoreline annexation. He said it was wrong since he received no additional services on these properties such as bus, Public Works; snow plowing, sidewalks, streetlights, sewers, or harbors. He was upset about these inequities and not happy about what had been promised Shoreline residents and what actually happened. He said the Commission should consider getting rid of the bus system to save some money and possibly lower taxes, but to watch out for the pitfalls as the consolidation effort continues.
Paul Hook, 488 North Point Higgins Road, indicated he was a new member to Ketchikan Charter Commission Minutes July 23, 2004 Page 1 0 of the North Tongass Fire & EMS Service Area Board and a volunteer for the North Tongass Fire & EMS department. He said he was against consolidating the fire departments because of the need for fast initial EMS services with the defibulators & hot monitors in the ambulance and firefighters who were trained to fight fires in a no-hydrant environment. He said the volunteers provide traffic control when needed so the EMS can have a safe environment while doing their jobs. There is a sense of community. Mutual aid works fine. Mr. Hook said that under areawide powers, in talking with other people of what happened since Shoreline was annexed, they don't have a manned firehouse. North Tongass needs one. First responders are needed. He said he could see the volunteers going away just like Shoreline's did. He said he could see the mill rate going out of control. The North Tongass Board is fighting very hard to keep the mill rate down and using an annual fee so that the payments are made equitable to all the affected citizens. He said he felt that if the North Tongass Fire & EMS service, there will be ambulance response from 10 or more miles away and there are a lot of elderly patients. A slow response by an ambulance wouldn't be appropriate for any of the emergencies. He said North Tongass Fire & EMS would not be able to provide the citizens of that area the services they need and pay for.
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