Assembly has spent poorly, is considering tax hikes after voters opted for tax cuts

By Frank Bergstrom

As a volunteer with the Affordable Juneau Coalition, please allow me to articulate the actual function and effect of the two tax initiatives that were overwhelmingly passed by voters during the 2025 municipal election. First is a nine mill limit on the operational portion of the property tax mill rate, and second is the senior sales tax exemption on food and utilities that was extended to all residents. 

First, your property tax bill is determined by two figures: (1) your assessed property value, and (2) the rate at which the City and Borough of Juneau (CBJ) taxes that value; i.e., the “mill rate.” One “mill” is equivalent to one tenth of 1%. The mill rate has several components. Three deal with general government operations and are referred to as the “operational” mill rate. The last is the “debt” mill rate, which is set by the Assembly to pay for CBJ debt, most commonly in the form of general obligation bonds. 

The operational mill rate, debt service mill rate and — by addition — total mill rate for the period of 2005 thru 2025 have changed little (total rate shown as dash/dot line in chart below). That is, the operational mill rate has been roughly nine mills (dashed line in chart) for most of the past two decades. During the same period the debt service mill rate has been roughly one- and one-half mills. 

(Graph by Frank Bergstrom)

The previous ceiling on the operational mill rate had been 12 mills. There has been no demonstrable need for that high ceiling. The ceiling has now been decreased to nine mills by Juneau voters (solid line in chart).

Lowering the cap to nine mills results in little to no change in your taxes. What it does do is hold the line on future property tax growth to no more than the increase in the value of your home; i.e, your assessment. The CBJ Finance Department confirmed this conclusion in their memo to the Assembly summarizing the proposed 2027 fiscal year budget (https:/juneau.org/category/budget). 

Importantly, the initiative imposes no limit on our ability to approve debt. 

The second initiative modified the sales tax exemption for seniors regarding essential food and utilities. As a result of the initiative, that exemption is now open to all citizens of Juneau. To be clear, the food must be good food — no junk food. 

For years Juneau has exempted its seniors from a tax on food. But is it morally reasonable to tax anyone for that same access to affordable food? The thought that a progressive community such as Juneau would have imposed the most regressive of all taxes on its citizens for life’s essentials is alarming. Surely there are better ways to pay for needed community expenses. 

As noted by the CBJ Finance Department, this could result in a reduction in CBJ revenue. If so, is it really needed revenue? Will the money people save on sales tax not be spent on something else? Are there no other taxable sales in coming years; such as, additional tourist spending?

Many of the people we spoke with during the initiative signature gathering process stated their displeasure with CBJ spending. That is, what are the real “needs” for public spending in this community vs what are the “wants” for same. Every one of us has both, and the CBJ is no different. While some may adamantly speak for the swimming pools, most everyone will speak just as loudly in support of pothole filling, clean water, traffic enforcement and drug interdiction. Which are our needs and which are our wants? 

Do you consider leveling Telephone Hill for $9 million a need? Do you consider purchase of a new office building, including new carpets, for $18 million after twice being voted down by Juneau voters to be a need? What grants does the CBJ make for what purpose to what organizations? What were the results obtained through these grants? Would you rather make your own tax-deductible donations or be taxed so the CBJ can make donations for you?

The Assembly chose to incur $12 million of debt to buy the police department a new communication system, while choosing to spend $9 million in cash to destroy housing and level Telephone Hill. Isn’t mountaintop removal a mining method employed in Appalachia? Is this our priority for our resources? Does speculative housing removal and ground alteration take precedence over police functionality?  

Next, let us consider the CBJ’s cash position. Last year alone, the CBJ realized $14 million in interest payments on its investments. At a conservative 4% interest, that would require $350 million in investments. Presumably that is not a long-term position in Berkshire Hathaway, but rather short-term investments of tax receipts remitted prior to their being spent. If so – and this is not in any way certain – why is the CBJ so far ahead on tax collections? How did the CBJ amass sufficient cash to level Telephone Hill ($9M), buy a new city hall ($18M), provide grants ($4M), payout Goldbelt to terminate its gracious loan for the Eaglecrest gondola ($12M)? Why would the Assembly make these payments and then propose to save money by closing any of our recreational facilities? Seems a little disingenuous.

And now the Assembly is seeking to raise the sales tax. As of last week the Assembly is well on the way to doubling or even eliminating the cap on purchases subject to sales tax. This will impact our mines in particular. Why would we burden our largest existing taxpayers with more taxes? This is a huge disincentive for future exploration and development, and it puts over 600 direct jobs, and at least that many support-sector jobs and families, at greater economic risk. The mines are large patrons of many charities and community activities. Will that largess be curtailed once their taxes are raised by millions of dollars? 

Taxing the mines is essentially taxing up to one-tenth of our citizenry. This is not an isolated tax on the rich. This affects a huge portion of our community. Why not take a little time, take a breath, watch the tax receipts this summer, and assess our priorities before imposing new taxes. Last October the voters overwhelmingly said we need to cut taxes and prioritize our spending. Were they wrong?

Let’s enjoy eating without first paying a tax, help our neighbors afford to live in our community, and help keep our youth in Juneau where they can find meaningful and productive careers and contribute to our community while keeping the chain of life moving. 

• Frank Bergstrom, a 37-year resident of Juneau, is a retired mining executive, consultant and contractor who is a member of the Affordable Juneau Coalition.