News-Miner Editorial
A proper proposition
Voters made good choice, but questions may be back
Published Thursday, October 9, 2008
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Stumble It!Local voters rightly rejected a proposal to change the borough’s revenue cap Tuesday, but, since the idea may bubble up again, continued vigilance is warranted.
A solid majority of borough voters agreed that the existing revenue cap is working. Sixty-five percent of those who cast ballots on the issue Tuesday agreed to reinforce the cap for another two years by approving Proposition A.
In contrast, only 44 percent of voters supported the proposed new revenue cap, Proposition B, which would have eliminated the current cap’s allowance for growth in local revenues from the taxes collected on new construction. About 56 percent of the voters rejected that idea. The unequivocal rejection relieved borough Mayor Jim Whitaker of deciding, had both propositions received a positive majority, which proposition to enforce.
The revised revenue cap would have gradually ratcheted individual tax bills downward, as proponents advertised.
However, it would have done so by severing the natural relationship between the community’s growth and its ability to pay for increased demand on its services. Assuming Fairbanks continues to grow, the most likely results of such a cap would be more crowded schools, more overflowing garbage transfer sites and poorer road and fire service outside the city.
The proposal could be back in two years, though, so it would be worthwhile for borough residents to continue to ponder the effects of such a change.
The current cap allows local revenues to grow not just from the property taxes on new construction but also to keep up with inflation, to pay for new bond debts, to handle emergencies and legal judgments and to cover the cost of “voter-approved” services.
That last category sets up an interesting potential interaction with the just-defeated Proposition B. If something like Proposition B passes, road and fire service districts in areas of growth would find themselves covering more homes and more heavily used road miles with no corresponding increase in revenue allowed. That is, unless the residents of those districts voted to increase their property tax rate, which would increase revenues. The residents could do that because “voter-approved” services appear to be exempted from the revenue cap, and a Proposition B-like measure wouldn’t change that.
This would be a cumbersome way to adjust for growth, though. It is much more efficient to allow tax revenues — not tax rates — to grow naturally with growth in the community.
That is what has happened in the borough in the two decades since the current revenue cap was first established. It’s what we should allow for the next 20 years and beyond.
Community Discussion
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You simply are spreading more propaganda. Just what is the dollar value of the FNSB advertising to the News-Miner, per year? Some wonder if that is the quid pro quo. You support every tax increase without fail, and the borough rewards you with significant advertising revenue.
Your claim that Proposition "B" would lower tax bills is utterly without merit. At best, it would have slowed the increase.
If the FNSB budget this year is 127 million, it could have been at least 132 million next year under the improved revenue cap. (This years budget multiplied by the current CPI).
That is an INCREASE of about five million dollars. That means increased, not lower, taxes to pay for all that good borough government.
Look around this community. It is a shell of what it could be. High property taxes- the highest in the state- have deterred many from building nice homes, or even living here.
Congratulations on selling out this community once again.
Now go count your silver.
I think more and more people need to start showing up at assembly meetings. If the politicians KNOW that they are having their feet held to the fire to CUT SPENDING, then maybe it could happen. And yes, I agree with you CEO, the FDNM does nothing but spread propoganda with their editorials. I have never seen an editorial staff so out of touch with the community that they live in.
We will not have to worry about growth in this community anytime soon. It will be interesting to see if the borough assessing department reduces appraisals by 20% to reflect the current housing market. When the borough assessors inflate housing values that is not community growth, but it gives them increased tax revenue nonetheless. Unless you are adding new neighborhoods there is very little incremental costs to provide additional services. My neighbors new house has yet to catch fire.
Haven't you read the propaganda, the economy and housing market in Fairbanks is just peachy. Another example of the DNM making this community look good to outsiders.
Hey Yukonjohn, don't you know you've got it backwards... Its not the editorial staff that's out of touch, its the community. At least that's how the editors see it.
CEO, I hate to say it, but on that one point, DNM is right. Proposition B would have forced the taxes from new construction in their first year to go directly into the general fund (instead of into the undesignated fund balance - the borough's "slush fund.") Since that would show up next year as increased revenue, the borough would have to collect less in property taxes to avoid going over the cap. That means EVERYONE gets to pay less in property taxes. And that is a good thing! Them not having the money in their "slush fund" would also have helped slow growth in the beaurocracy, which is what they use the slush fund for (not to give us better service, certainly). But the revenue cap would still have continued to rise, because of the other exceptions still there, as well as the cost of living clause - it would just have been a lot slower than it will be now.
Igloo, you and Donna keep talking about all this money being put away in a borough slush fund. Sorry, but you are factually incorrect. The undesignated fund balance is around 14 million dollars, and has stayed at about that amount for many years. Read the borough budgets. Look at the growth in FNSB spending above inflation- if all that extra growth in spending was being put in a "slush" fund the slush fund would have about a 20 million dollar deposit just this year. Overall, the "slush" fund would be many, many multiples of what it is now.
Too bad Donna did not do her homework on this. I cringed every time she made that embarrassing claim on the radio.
Note that the undesignated fund balance is used as a revolving loan fund. As bills come in, they get paid, when revenues come in they are used to repay the fund. This is a better approach than the FNSB borrowing money from local banks, and paying interest, thus costing us more money.
Igloo, what you are missing is that you must take the entire revenue cap formula into account to back up your claims.
First, the 127 million budget this year gets a 1.04 multiplier- the CPI for this year. That puts the next FY budget for the borough at 132 million. That is an increase of five million in spending.
Where do you think that revenue is going to come from?
Property tax payers, that's where. That is why even with the new formula, taxpayers would be paying MORE, not less, in taxes.
That is why both you and the News-Miner are incorrect.
Remember, you are dealing with a formula. The current budget, plus inflation, plus bonds, plus emergencies, plus new construction.
You can not remove one item from the formula and tell us that results in lower taxes. Removing only one item from the formula only can slow the rate of GROWTH of borough revenue.
Remove the property tax or at least reduce it 300% and start with a small sales tax with a tax cap (like 3% with $6 cap). Especially with the amount of spending that recently went on with PFD season, the borough could have alot of monetary income with little impact to the economy.
The News-Miner has out-and-out lied in this editorial. I sure wish they'd put a byline on the editorial so we know who lack's integrity.
news miner is wrong!
Imusuallyright...in this case...YOU ARE RIGHT!! The editorial staff of the DNM is so far out to lunch that it is pathetic!!
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