Important Community Information
By Rodney Dial
September 17, 2009
As you decide how you will vote on the proposed Pool bonds on
October 6th, you may want to consider the following concerning
the health of the City and Borough finances:
Most of the following
is from the City's annual report and the FY 2010 Community Legislative
funding request (FY2010 CLFR) prepared by the City and Borough.
- Borough budget up 1.3 million
- City operating budget projected
to increase by $2.9 million from 2008 to 2009.
- Borough plus City budget increases
equal approximately $320.00 additional (on top of existing) tax
burden per capita in Ketchikan (just one year).
- Per the FY2010 CLFR the Borough
reports the following: "To meet the fiscal demands of
local government, citizens of the KGB bear the following impacts$63,859,401.00
(fiscal year spending) which is equivalent to $11,826.00 per
- Charges for services, e.g.
ambulance, parking solid waste fees, etc projected to increase
- Harbor fees will continue
to increase as a result of harbor rates increases that took effect
in April. The rate of increases range from 7.5% for reserved
moorage to 38% for transient moorage.
- Approximately 6.6% of the
City's budget / spending now goes to service debt. This years
cost projected at $3.7 million.
- City property tax revenue
increased last year due to a 10.2 % average rise in property
assessments. Property assessments expected to increase again
in 2010, surpassing inflation.
- Borough property values have
increased over 30% since 2003, far exceeding inflation resulting
in significantly higher property taxes.
- Borough property taxes rates
up over 600% since an all time low in the 80's (if inflation
is considered the increase is even greater). This increase even
factors in the recent (small) cut in the mill rate. The mill
rate decrease averages less than the last assessment increase
for most families. Sales tax rates during the same time frame
have more than doubled.
- The estimated cost of the
community capital improvement plan (CIP) for the five year period
ending 12/31/2013 is $98.3 million.
- Library budget up $110,000.00
since 2006. The amount the City paid for a design of a new library
$1.57 million- now obsolete due to building location change.
To put this into comparison, the City could have bought the
entire mall for about double what they paid for a set of BLUEPRINTS.
Increased operating cost if the proposed library is built.additional
$150,000.00 per year.
- The proposed CIP for the harbor
department between 2009-13 includes $15.2 million in improvements
and upgrades. Absent assistance from the State the City will
be required to fund $13.9 million by issuing bonds. Per the
finance department harbor rates would have to double over the
next five years to provide the debt service on those bonds.
- In order to balance the 2009
proposed budget for the Gateway Center the City increased the
contribution from the hospital sales tax fund from $768k to $1.45
- Water rates increased by 11.4%
in 2009. Due to the current City budget crisis an additional
double digit increase is currently under consideration.
Is the City and Borough being
fiscally responsible?...you decide
- City "gave-away"
$802,802.00 to non-profits this year, Borough hundreds of thousands
as well. Many communities do not fund non-profits.
- Subsidizing bus service (all)
now over a million per year. Free shuttle service for tourists.
- Borough budgeted $501,000.00
for a shuttle service from the airport to land side parking lot.almost
no one is riding it. Even after grants and fees, it will cost
the taxpayers at least $200,000.00 per year.
- Borough now renting the Whitecliff
building at an additional cost of $495,120.00 per year, with
a $9.47 million purchase liability that they have no plan to
pay for. If the Borough can not get the state to pay for the
building, a tax increase will be needed. Could have rented downtown
commercial property or mall space for a fraction of the cost.
It certainly seems that this was more about saving a historical
property and not about finding the most cost effective solution
for borough offices.
- Borough spent $500,000.00
for bathrooms for tourists, they are calling it a performing
arts center (no lie) Cruise ship tax monies (CST). If this is
challenged by the industry the borough may be forced to pay back
the funds. As I mentioned in a previous letter, I expect Mayor
Kiffer to funnel local tax money each year to First City Players
"to maintain" these bathrooms once they are built.
Time will tell.
- City, $338,000.00 for the
metal pole signs downtown. Interestingly enough, the borough
recently transferred another $27k in CST funds to replace some
of the signs on Creek St.
- City, $100k pedestrian way
finding survey. Contract with an outside firm to tell the City
the best way to herd the tourists.
- City spent $247,150.00 on
two bronze statues and stain glass window art (it's in their
- Borough spent between 100k-300,000
on a bronze statue of their own (I don't know the exact amount)
CST funds. Glad we don't need that money for maintaining the
- Borough spent $3,200.00 to
$55,873.00 (depending on how you crunch the numbers) for a voter
pamphlet regarding the pool -is it objective or propaganda?
- City budget proposal includes
tens of thousands of dollars to renovate City break rooms.
- City $32 million Birth III,
$100 million contract for Birth IV. City is currently unable
to fund needed repairs to Birth I and II which is expected to
cost $26-31 Million. As reported in the KDN on 9-17-09, corrosion
was recently discovered on the 3 year old Birth III. Cost to
repair is estimated at $45,068.00 for design and interim repairs,
$184,316.00 for further design and inspection, and $615,000.00
for final repairs.
- City and Borough? spend tens
of thousands of dollars yearly to "woo" Juneau legislators.
Last year this included renting the entire restaurant in the
Pioneer hotel (Juneau) providing free buffet and open no cost
bar (free alcohol) to ANYONE in Juneau who walked through the
door (hundreds attended). I attended some of these meetings
and learned that the Pool was listed low on the community priority
"wish-list". Why? Because your leaders want the State
to fund projects the voters here are unlikely to support, and
have you tax yourselves for more popular projects. For your
information, they deemed a training center and a maintenance
facility as more important than the pool. We might have been
able to have the state fund the pool last legislative session
had it been listed as the top community priority.
- And on and on, I'm sure there
is more, but I am tired of looking and need to go to work to
pay my taxes.
People like me have been testifying
before the City and Borough assemblies for years now asking that
they hold the line on spending and prepare for the effects of
the economic downturn. Have they?....no, many are too influenced
by the special interests they are involved in, or too close to
the supporters of these projects. Here is what the latest data
Most of the following information
is from a July 21st Ketchikan Daily News article, the rest is
from other news articles and government reports.
- Sales tax revenue for the
first quarter of the year down 8.4%
- $125,000.00 less sales tax
revenue for the City so far, and if the trend continues $800,000.00
less sales tax revenue for the year.
- Gross sales down 5.84% (go
to the realtor web sites on SitNews and see how many commercial
properties are for sale; our local businesses are hurting)
- Cruise ship passengers down
3.26% and if the trend continues, 30k fewer passengers than 2008,
resulting in $210,000.00 decline in passenger fees (this year).
- Five cruise lines have announced
that they will cut the number of ships stopping in Ketchikan
in 2010 which equals a loss of 113,000 passengers (still think
it is a good idea to spend a lot of money?) That many passengers
would cost the City $628,000.00 in lost sales tax revenue, $1.03
million in port fees, and $30,000.00 in water sales. Borough
will lose millions as well. One bright note is that Disney Cruise
lines may help stem the loss, however we will still be negative
by at least 75k.
- School enrollment down 5%
in one year, projected to continue to decline.
- Alaska Airlines announced
(on 9/12/08) it is reducing capacity in Ketchikan 8% through
2009 and reducing its work force by 9-10%.
- Community population declining
(fewer people left to pay the bills).
- Our young people unable to
afford to live here and are leaving in record numbers due to
the high cost of living.
What are your leaders doing
to address these severe budget problems?
Several have suggested
- Another increase in water
rates, on top of the 11.4% rate hike a few months ago (Williams
- A new (additional) tax to
fund detox services for inebriates.
- Consideration of a property
tax increase recommended by City Manager Amylon, who wrote."With
the City experiencing its first decline in sales tax revenues
since 2002, this policy (of maintaining the property tax rate)
may no longer be as effective. Amylon also recently suggested
raising the sales tax rate by one half cent to fund bridge repair.
- City considering increasing
the sales tax cap from 1k to 2k. Means if you buy a new car or
another expensive item or service the sales tax goes from $60
- Senior sales tax and property
tax exemptions. The City and Borough constantly complain that
the senior PROPERTY tax exemption is an unfunded mandate, and
list the senior SALES TAX exemption on their books as a loss.
Page 15, of FY2010 CLFR prepared by our governments says the
"The following additional
duties and unfunded mandates imposed on the borough will add
(several line-items) Mandatory property tax exemptions $635,000.00".
When times get tough the senior
SALES TAX (not property tax exemption) exemption becomes a target
for elimination or reduction. The City of Juneau brought this
up a few years ago. So far our governments have not discussed
this topic this year, but it is always in danger if /when spending
Folks bad financial times are
in our future. The City and Borough have mortgaged us to the
hilt with projects such as the Whitecliff building and the 100
Million dollar contract for Birth IV. They enter into contracts
for these projects, instead of bonding, because it is the ONLY
WAY to avoid a public vote that they know would not go their
way. We may need to consider a citizen initiative requiring
voter approval for any government contract over a set amount.
It would be nice if one of the more fiscally conservative leaders,
(K.J. or Thompson?) would submit a proposal of this nature.
The City is currently burning
through its reserves and finding it impossible to maintain what
it has. The Borough increased its operating budget by $1.3 million
in just one year and is still pushing through multi-million dollar
projects such as the mega-pool.
The bond for the pool will
be October 6th, but the full effects of the economic downturn
will not be fully known until a few months later. For the pool
to not increase taxes, or cause cuts to other areas of the budget
really depends on several factors.
I strongly suspect that some
of our leaders base the ability to fund this project on past
sales tax projections. If tax revenue is down, and/or project
costs increase then the additional funding needed has to come
from somewhere and that usually means tax increases.
We should vote "No"
on the Pool bonds for the following reasons:
- We already have a pool and
with proper maintenance it will last for years. Even if we vote
yes a new pool will not be built for two years. Some are trying
to "hype" you into believing that the situation is
dire and we must do something now. In reality this is how voters
are manipulated into building these mega projects.
- If we renovate our existing
pool, vs. building a new one, we will save at least $11.5 million.
Ask yourself why you are not being given that option on the
ballot. Valley park pool can be re-opened while Mike Smithers
Pool is being renovated, meaning that we will ALWAYS have an
- The proposed mega-pool is
significantly larger than our current one. As a result, operating
expenses will increase. The new pool will cost approximately
$30,000.00 or more per month just to heat (does not include the
- The bonds are for 30 years.
The projected life of the new pool is approximately 25 yrs meaning
that before the bonds are paid off, the pool will likely need
significant renovation (another bond). Our current pool can
be renovated to last just as long, with bonds half the length
and half the expense.
- According to the borough IF
(note big IF) they are able to get funding for the pool at a
interest rate of 5.2% (considered unrealistically low by some),
annual principal and interest payments will be $1,563,737.00
for 30 years. $23.5 million in bonds equals approximately $50
million or more when interest is included (depends on interest
- Currently the Borough has
$24,965,000.00 in debt, and the City an additional $10,030,828.00
(both are general obligation debt, does not include other debt
such as Births I-III, future liabilities, etc). Current general
obligation debt is $3257.00 per person (City residents, less
for those outside the City). If the pool bonds are passed per
capita debt will INCREASE by $1809.00.
- Incurring this much additional
debt will make future borrowing for the City and Borough more
expensive. Debt markets / lenders typically increase interest
rates for communities with high debt loads. This will make future
bonds for critical infrastructure such as schools higher. Keep
in mind that the pool bonds being proposed are for 30 YEARS.
- The following is a quote from
the Borough regarding the proposed pool bonds. "A general
obligation (G.O.) bond is backed by the full faith and credit
of the borough. If circumstances change, the borough is still
required to pay the bonds. If for example, sales tax revenue
drops significantly, the borough may have to raise property taxes
or cut services (expenses to make up the shortfall." Folks,
sales tax revenue is already dropping!
- A "no" vote will
hopefully convince the Borough to list the pool as community
priority one, and seek funding from the State. This could cut
the project cost in half.
If we approve these bonds,
this will MAX-OUT the recreation sales tax account, and possibly
put it in the negative if sales tax revenue drops off as expected
(see above). This gives us no ability to maintain the recreational
assets we already have without raising taxes, transfers from
the General Fund, or cutting other programs. For example, the
borough reports in the FY2010 CLFR the following regarding the
Recreational Center BUILT IN 1997.
"The furnishings have
exhausted their wear and tear; the roof has holes in the metal
roof panels that need to be repaired. Heavy precipitation and
snowfall/ice could cause further damage if not repaired immediately."
A recent article in the KDN
reports that the Recreational Center Roof replacement is now
estimated to cost close to a million dollars.
Where is the money coming from
to fix this, our parks, sports fields, or maintain the newly
acquired Coast Guard Beach? The answer is YOU. If you remember,
you were originally told that to build a new pool would require
a one-half cent sales tax increase for 10 yearsthen it changed
to no tax increase. Why?
1. Because it was likely that
the Chamber of Commerce would oppose a sales tax increase as
they did when the City proposed one for bridge repair.
2. Because our leaders knew
the voters were unlikely to pass a sales tax increase, and
3. To manipulate the voter
into thinking that we have sufficient resources to fund this
project without raising taxes or affecting the budget. Keep
in mind that Mayor Kiffer was on the Pool Committee, and that
you are not being given the option on the ballot to renovate
our existing pool.
This is a shell game folks.you can get a new pool with no DIRECT
tax increase (hopefully) and pay new and increased taxes to maintain
and repair our other community assets, or the other way around.
Either way THERE WILL BE NEW TAXES AS A RESULT OF THE MEGA-POOL
Not quite upset yet?... Did
you know that the new pool is slated to be built where the skateboard
park is now? Have no fear, the Borough is proposing to build
a new and bigger skate park when the pool is built and has projected
an ADDITIONAL expense of $125,000.00 to pay for it (see page
81, FY2010 CLFR). This is not an expense we would incur if we
renovate the pool.
In another letter I will discuss
the other $200 plus million dollars of proposed projects including
such things as larger museum, parking garage, bus maintenance
I will close by saying this:
In 2005 pool supporters in
Juneau tried the same doom and gloom tactics to get the voters
there to build them a similar sized mega pool in Mendenhall Valley.
The voters rejected the proposal, sending them back to the drawing
board. In just over a year, Juneau government found a way to
reduce the project cost by nearly ten million dollars and the
project was approved by the voters in 2007.
We need to look for additional
(outside) funding and savings, and wait to see what our community
financial situation will be at the end of this year.
Just because you are told that
you can get a mega-pool without a tax increase, does not mean
the mega-pool will not cause a tax increase. The existing recreational
sales tax fund can completely renovate our existing pool AND
provide funding to operate and maintain what we have. This is
a far better choice for our community.
Please make a sound fiscal
decision for this community, not an emotional one as Mayor Kiffer
would have you do. Please vote "no" on October 6th,
and talk to your neighbors about this important issue.
Received September 17, 2009
- Published September 17, 2009
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