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Consolidation is bad for Ketchikan. Please vote no.
By Rodney Dial


November 17, 2006

On 11/15 Ketchikan Consolidation Commission Member Debbie Otte wrote a letter in which she attacked those who have recently sent letters urging a no vote on consolidation.

I would like to point out a few observations concerning her letter, and refute her statements with facts.


None of her statements were supported by fact, evidence, etc.

Her letter says "When consolidation passes". This is arrogant. The issue of consolidation is for the voters to decide.

She does not like being associated with Big Business and resents the association. Unless you are trying to claim that The Landing and Chamber of Commerce are not big business, you're associated. They are spending thousands to support consolidation and have been part of the KCC's process over the last two years.


You claim the following:

1. It is NOT a fact that the Troopers will leave Ketchikan if consolidation occurs. There is always that possibility, even with the two governments.

The truth is that your statement is false for a number of reasons.
The consolidation document which you worked on for the last two years states the following:
AS 29.05.130(a) provides that the LBC may grant the consolidation petition only if the commission determines that the proposal is in the best interest of the state. Further that the LBC is guided by 3 AAC 110.065 in making the best interest determination. AAC stands for Alaska Administrative Code. If you look up this section, under paragraph number three it reads (3) will relieve the state government of the responsibility of providing local services. This includes many services from Road Maintenance to Public Safety and will increase costs to the residents of the City, North, South and Saxman.

Reason #2
The State is mandated by State Law to provide public safety services. As long as we remain unconsolidated, and the public refuses to pay to provide public safety services, they can not be forced.

Reason #3
Juneau, Sitka and Anchorage lost Trooper coverage after they consolidated. We have not consolidated and have coverage. This brings in millions of dollars in State funding to our island and supports our economy at no expense to the local tax payer.

Claim number two:
You say
2. Nowhere in our deliberations did we discuss cutting the senior tax exemption -- nowhere.

Absolutely false, borderline lie. I take great pleasure in disproving this claim.

Reason #1
This was one of the first things that the KCC (you were present) discussed after formation.
On 9-10-04, the KCC Agenda Statement (submitted by Glen Thompson) included his recommendation that the sales tax polices should be reevaluated and overhauled to include the senior citizen exemption (see KCC Web site - Agenda Statement # G-1 and G-2 9/10/04).
Dear Ms. Otte, perhaps you can clarify exactly how you overhaul an exemption. Since it is a 100% exemption now it certainly can't get any better. In my book that means that any overhaul would mean the reduction, or elimination of it.

As long as we remain NON CONSOLIDATED it is virtually impossible for both governments to eliminate this exemption.

Reason #2
Other consolidated municipalities are/have been working to eliminate senior citizen exemptions. Here are a few recent articles from our consolidated neighbor to the north, Juneau. Source, Juneau Empire.

Task force considers senior tax exemption

The Senior Sales Tax Exemption Task Force will meet Tuesday to hammer out its final recommendations for the tax break's future.

Boomers may bust city coffers
Sales tax exemption task force asks for public comments
Debate will heat up this spring when the Juneau Assembly decides whether to continue a senior sales tax exemption.

Claim #3
You say
3. There is a likelihood that our taxes will increase, consolidated or not. Expenses are going up and either the City and Borough expend their reserves down to nothing, or the taxes are going to go up. Count on it.

Yes, our taxes may go up if we consolidate or not. The important point is how much more they increase ONLY BECAUSE OF CONSOLIDATION.


During the KCC discussions (for which you were present) it was decided that KCC would not present a document for the public showing the cost now, the cost if we consolidate and the future cost if we don't. You were not even willing to estimate the cost increase due to consolidation and chose to withhold this information from the public.

The consolidated borough will initially collect $115,273 more in property taxes. (Source Consolidation Document).

Areawide taxes (City, North, South, Saxman) are projected to increase by two mills in the first year of consolidation. (Source consolidation document).

Saxman Sales Tax increase (Source consolidation document).

PILT Tax change at KPU that will raise rates (Source KCC agenda meeting minutes).

Duplicate City and Borough positions have been programmed for the higher
of the City or Borough salary and the three-year budget assumes full staffing for all
positions. (Source consolidation document).

The Municipality of Ketchikan will enter into a new Public Employees Retirement
System participation agreement with the State of Alaska (source consolidation document).
Per the State of Alaska the new municipality will have to pay the cost associated with the work the State will do regarding this agreement. This cost is not factored into the budget prepared by the KCC. Also, The City's PERS contribution rate is more than 20% higher than the borough meaning that merging the employees will result in a net increase in PERS costs over what is currently being paid. This factor alone could cost millions each year. Per the State of Alaska the KCC NEVER contacted them for an estimate of how much this would cost. Why, because if they didn t ask, they don't have to disclose.

Also, to this day not one member of the KCC, including Ms. Otte, has mentioned the transition costs due to consolidation, or the ongoing costs. In the Fairbanks area, they are trying to consolidate the City of North Pole into Fairbanks. They estimate their transition costs at approximately 5 million (at least they are being more honest).

Ms. Otte, you and the other members of the KCC keep referring to savings, but you continue to deny any new cost increases. The truth is that any savings will be offset many times over by increased spending. Further, this does not even include the expected 2.2 million dollar loss due to the recently passed cruise ship initiative.

You forgot to mention that the KCC intentionally removed the tax cap from the consolidation document. Further, that this cap would have allowed the new municipality to raise property taxes 20% higher than they are now. My question to you Ms. Otte is that if consolidation would save money as you claim, then why does the new municipality need the ability to raise property tax more than 20%?

You also fail to mention that the City has a plan to pay for City PERS increases without raising taxes, if consolidation does not happen. In fact, City residents are only getting a tax increase because of consolidation. Here is what I found in your consolidation documents:

The City's plan was to increase transfer subsidies from the Public Works Sales Tax fund to the General Fund to avoid raising the mil levy . (Source Reply Brief ITMO Petition for Consolidation of the Ketchikan Gateway Borough and the City of Ketchikan).

This proposal was shot down by KCC who decided instead to propose a 2 mil City/Areawide tax increase.

What this means is that City residents who will receive absolutely nothing from consolidation will have their property taxes raised by a completely identical amount as those who live outside the city (per the consolidation document), but will actually pay a greater percentage of the cost of consolidation because the city contains a higher percentage of the taxable property.

The bottom line:

If consolidation passes we can expect decades of Schoenbar type of excuses such as:
We did not know, could not have anticipated, revenues were not as expected, costs increased, etc. This will be used over and over again to justify tax increase after tax increase.

I will leave you with a few words from the KCC Members (Otte included) taken from their own meeting minutes, these are word for word. I did not add anything:

There was then a $2.1 million deficit that PERS & TRS causes to the combined budget. As he and OTTE were going through the documents, and he said he was struggling as to what to do about that, he said he didn t know how to do it and the fund transfer subsidies made it well over $3 million, OTTE told him to make it as transparent as it could possibly be. So that s what he did, but once he got together with OTTE to put the final document together, he realized that a budget had to be presented that didn t have a $3 million/year deficit, so he plugged those holes and the simplest choice to plug in the 2-mil increase and to put those fund transfers back in.

Ketchikan Charter Commission September 16, 2005 Meeting Minutes

THOMPSON said that he felt the Commission s budget was pretty tight when
submitted. There were a few things wrong with it, but he said he thought
another discussion and narrative, rather than the summary page, needs to be
done and include the PERS/TRS in there. He said if we increase the costs, we re going to increase the revenue one to one.

THOMPSON said that in terms of the proposed budget, it was not critical to what was being done to balance the budget at the time a year ago. The move was done from the standpoint of logic rather than finances and now, looking back at it, since the City has a problem with it, it s not a great effort to change it back. He said, in fact, that if the Commission needs to have more taxes on an areawide basis, we d put those in .

The service area has already established that this is what they need for sales taxes and in their view of the Petition budget; they said they still need those taxes and the Commission shouldn't take % away. If another % in taxes is needed areawide, raise the taxes.
(Ketchikan Charter Commission August 5, 2005 Meeting Minutes)

Regarding the elimination of positions

MCCARTY said that could be the introduction to the budget section saying the
Commission made a philosophical choice that the staffing is a political choice for the Assembly to make.

(Note: This means reducing the total number of employees is only a recommendation - no guarantee).

Discussion regarding new taxes to KPU (another cost passed on to you courtesy of consolidation)

HARRINGTON said he understood that this was done to be fair, but he said he
wanted to be clear. He said, so we are building into this new budget a property
tax PILT on KPU which must amount to $650,000 which, of course, is paid for by the rate payers, which is you and I, which comes out to about $60 per person.

Consolidation will dramatically increase your household expenses. As proof as I ask you this. Have you ever been told even once how much consolidation will cost, or even given a single negative by supporters? Think Schoenbar times a thousand, and you will begin to see what we have in store if consolidation passes.

Monday is your last day to go to the Borough Office and Vote, if you have not already done so. Please help us save Ketchikan and vote no.

Rodney Dial
Ketchikan, AK

Received November 16, 2006 - Published November 17, 2006




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