Election guide: Ballot propositions 1, 2 and 3
- Mark Sabbatini
- 3 days ago
- 11 min read
Much of the debate on proposals affecting property and sales taxes has opposing sides favoring votes of yes/yes/no or no/yes/yes
By Mark Sabbatini
Juneau Independent
Residents are voting on three individual tax-related ballot measures in the Oct. 7 election. But most of the debate so far involves asking people to vote yes on two items while rejecting a third.
Which two items voters pick — if that outcome occurs — will have significantly different impacts on the city government’s financial future.
Overview
Simplified summaries of the ballot measures and officially projected impacts to the existing budget are: • Proposition 1: Lowers the cap on property taxes to nine mills instead of 12. Results in $1 million less tax revenue.
• Proposition 2: Exempt food and utilities from the city’s sales tax, which is currently 5%. Results in $9 million to $11 million less revenue.
• Proposition 3: Implemented a sales tax of 3% from October to March, and 7.5% from April to September. Seeks to essentially offset the impact of Proposition 2.
Two opposing ‘groups’
The yes/yes/no group: The Affordable Juneau Coalition is urging "yes" votes on Propositions 1 and 2 (having placed both on the ballot via signature petitions) to ease the burden on taxpayers. The group is opposing Proposition 3 as a misguided tax increase.
The no/yes/yes group: The three incumbent Assembly members seeking reelection (and many other city leaders) are urging a "no" vote on Proposition 1, and "yes" votes on Propositions 2 and 3 to keep city finances stable while shifting more of the revenue burden to tourists.
While both combinations result in Proposition 2 passing, opposition to that measure exists. The Assembly incumbents say they do not support it unless the seasonal sales tax also passes, since otherwise the lost revenue would result in significant budget cuts. Other locals have said they oppose the idea outright, in some instances because they also oppose the seasonal sales tax.
Details and arguments for/against each proposition
Note: The following are largely based on interviews with Affordable Juneau Coalition Treasurer Angela Rodell and former Juneau Deputy Mayor Michelle Bonnett Hale
Proposition 1
Official language
"Except as provided in this section, the assembly shall not levy on real or personal property any tax exceeding the total of 9 mills plus that additional millage required to service general obligation indebtedness. The assembly may levy a tax exceeding this total only after seeking and securing voter approval by a majority of those voting on the question at a general or special election…This measure shall be effective 30 days after enactment."
What it does
Juneau’s current mill rate is 10.24, of which 1.08 is "debt service" (payments on bonds and loans). Under Proposition 1, the maximum mill rate this year would be 10.08 mills (the nine-mill cap and 1.08 of debt service since it is exempt from the cap). The Assembly could set the rate higher only with voter approval in a regular or special election.
However, passage of the measure would not automatically lower the mill rate 30 days later. Rather, it would apply the next time the Assembly took action on the mill rate, with members typically determining the rate each spring as part of the annual budget process.
Arguments in favor
Rodell said a lower property tax cap will force city leaders to make more disciplined budget decisions. It also will help residents in two ways: by providing some immediate reduction in tax payments and ensuring they won’t be forced to pay higher rates unless the Assembly gets approval from voters to do so.
She also rejects an argument from opponents of the measure who say it will primarily benefit wealthy property owners.
"If you look at the voter information guide that came out, I think they said you'd save $80 if your home is assessed at $500,000," she said. "And it's like $1,600 if you have a $10 million piece of property. So it's not a lot for anybody, I would argue. I think it's more symbolic than anything."
"But symbolism matters. It shows a willingness to be part of the belt-tightening, as opposed to being on the opposite side of the belt-tightening. So it's the sense of ‘You as a resident of Juneau, your rents have gone up (and) your property taxes. You've got to tighten your belt. But, hey, we know you like all our services, so we're just going to sit here and do this like we've always done it, and we're not going to be a part of that (belt-tightening).’"
The other primary argument of opponents is the lower mill rate cap will prevent the Assembly from being able to raise the rate and collect needed revenue for emergency or unexpected circumstances, with the COVID-19 pandemic and record glacial lake outburst floods cited as examples from recent years. Rodell said the projected loss of $1 million if a cap existed this year is a tiny fraction of the city’s budget (roughly $200 million for municipal programs and projects) and there are tens of millions of dollars in reserve funds for emergencies if needed.
Rodell also noted a lack of affordable housing has been one of Juneau’s biggest issues for years, and is a main contributor to a workforce shortage and ongoing population decline.
"We've seen it happen in other communities where the property tax becomes so big that people are forced to leave their homes," she said. "And we want if we want affordable housing, we need that churn — we need people moving up, moving in. Current housing market interest rates don't help on that, but there's nothing the city can do about that. But what can the city do? The city can look at property taxes. The city can look at how it's adding to the cost of housing."
Arguments in opposition
Putting a tighter limit on available funds and asking the city to tap reserves if a disaster occurs is a recipe for financial disaster as well, Hale said.
"There is no status quo in city government because the financial picture changes constantly," she said. "The economic picture changes constantly, and that's why the budget has to be worked on every single year."
That means setting a mill rate that, among other things, considers current assessed values of properties and what the mill rate needs to be to achieve a balanced budget, Hale said. If the city is forced to keep the rate steady while costs go up for everyday things such as street work, as well as unexpected things such as flood repairs, then leaders will be in an unsustainable situation.
"If we have to start tapping the budget reserve, it's going to go fast," she said. "When you're in a situation where you're having to spend from savings it's a dangerous place to be. That's why one of the rules of the budget reserve is if the Assembly uses it they're supposed to define how they're going to pay it back."
Hale said she agrees housing costs are a primary reason it’s difficult to lure and keep residents in Juneau, but saving $80 in property taxes a year on a $500,000 home isn’t going to solve that issue. Among the things that will help are ensuring the city can provide services and programs that make people want to live here.
"What's going to keep people in Juneau is finding a way of building more affordable housing when we have a really bad situation," she said. Also, "the city's been working on childcare since before COVID. That's a really hard problem. Nationally, it's a hard problem (and) at the state level. The city has done more than most communities, and we were out there with childcare grants right out of the blocks when COVID happened. So those are the things that people cite when they talk about affordability and their ability to live in Juneau."
Proposition 2
Official summary
"This initiative petition proposes to amend the City and Borough of Juneau (CBJ) Code 69.05.040 to create a new section which would exempt essential food and non-commercial utilities from CBJ sales tax for residents within the City and Borough."
What it does
Makes food items defined as essential under the Food and Nutrition Act of 2008 (a.k.a items that can be bought with food stamps), and non-commercial power/water/waterwater/heating/waste/recycling services, exempt from city sales tax that is currently 5%.
Financial impacts
City officials estimate $5 million to $6 million a year in food taxes and $4 million to $5 million in utilities taxes would be lost under existing consumer/resident spending. The city’s budget for the current fiscal year includes roughly $140 million for municipal operations and $60 million for capital projects.
Arguments in favor
Rodell said the measure will require the Assembly to focus on needs rather than wants during the budgeting process, and in the meantime residents will get significant relief from Juneau’s high living costs.
"I don't think about the $10 (million) to $12 million (in lost revenue), because to me if you focus on the budget you're focusing on the wrong issue," she said. "We are focused on affordability. And how do we help young families and workers stay here, and reduce the cost of living? And how can we do that with what the city has as tools in its toolbox?"
Assembly members have agreed that essential services such as public safety and streets would be prioritized with a lower budget — but that means popular programs such as libraries, Eaglecrest Ski Area, and community grants to a wide range of organizations would be hit. Rodell referred to some comments and actions — such talk of closing Eagecrest and withholding grant funds pending the outcome of the election — as "scare tactics." But she said a more reasoned discussion of city spending is wise.
"There's this track of planning and having really important conversations with the Assembly about what this would look like going forward," she said. "Using the one-time funds to cover the short-term, immediate shortfalls that might hit the budget sort of cushions that."
"But the Assembly should be talking now about (how) we have three libraries. We're going to close the downtown library, and we'll only operate Douglas and in the Valley. Go use one of those. I don't know what that generates. I don't know if that's a legitimate idea. Do I think people would be upset by that? No question, people will be upset that one of the three libraries closed, but you have to put this stuff out there."
Juneau’s in a long-term population decline, including fewer students, which means it can’t realistically keep all of its spending and programs intact if that trend continues, Rodell said. She said an overlooked aspect of the debate about the ballot propositions is those sponsored by her group may encourage economic growth that ends up benefiting the municipal government as well.
The projected loss of up to $11 million "assumes the status quo economy and it doesn't allow for growth in the economic engine that is here in Juneau to generate additional sales tax," she said.
Arguments in opposition
Assembly members have considered and rejected a sales tax exemption for food and utilities in past years, noting among other things that seniors are already exempted from those taxes, and people using food stamps don’t pay taxes on those purchases. Furthermore, some members said it wasn’t a highlight issue or priority among residents they talked to.
However, residents feel very strongly about services and programs provided by the city, Hale said.
"You have to put Eaglecrest in a different place than police and fire," she said. "However, I will say the reason that the Assembly has continued to fund Eaglecrest — even though it's been very difficult in the last few years, to be sure — and the reason that the Assembly is interested in the pools and the libraries is it's so important to the quality of life in Juneau."
Supporters of Proposition 2 say it’s not just about setting priorities — they also have called the city’s budget "lavish" and leaders have made poor decisions, such as seeking to spend up to $17 million to move City Hall to a different building when voters have twice rejected bonds for a new City Hall.
Hale rejected those characterizations, saying the city budget "is not much above bare bones" due to diminishing state and federal funds as well as other cuts. The city has also in recent years provided essential support when needed — and because it was available — to the Juneau School District and city-owned Bartlett Regional Hospital when they were facing financial crises.
"I think it kind of boils down to whether people with more wealth and resources have a responsibility to pay more for government services and to run the community," she said. "And I think they do…I have paid taxes that fund education my entire life and I will continue to do so, and I think it's critical and I want to keep doing that. This will actually impact what goes to education. You know, Juneau funds to the cap. Well, when we get not enough money we're not going to be able to fund to the cap."
Proposition 3
Official summary
"This ballot proposition would implement a new permanent sales tax at a rate of 2% October 1 through March 31, 6.5% April 1 through September 30 and repeal the temporary 3% sales tax and permanent 1% sales tax. This would not repeal the 1% temporary sales tax approved by voters in October 2023. The result is total sales tax rates of 3% in the winter and 7.5% in the summer."
What it does
Results in an average sales tax of 5.25% during the year, compared to 5% now. Furthermore, it makes the two seasonal rates permanent, so residents would not be asked every five years to renew temporary taxes of 3% (up for renewal in 2027) and 1% (up for renewal in 2028) that have been in effect for decades.
Financial impacts
Assembly members who voted to put the measure on the ballot said the adjusted seasonal amounts are meant to offset the $9 million to $11 million loss in revenue if Proposition 2 passes. They also note a higher ratio of total sales tax revenue collected by the city would come from tourists due to the higher April to September rate.
Arguments in favor
City officials argue the average Juneau resident will pay about $300 less overall in sales taxes if Propositions 2 and 3 both pass, with the more than 1.5 million cruise tourists arriving annually making up for that savings.
"They're not trying to make taxes higher," Hale said. "They are trying to balance a big revenue hole."
Hale said the higher tax isn’t likely to significantly alter visitors’ spending habits since such levies are common.
"I agree that somebody from Ohio should pay more," she said during a forum on ballot propositions hosted Sept. 19 by the Juneau-Gastineau Rotary Club. "When we travel we pay higher taxes all the time because sales taxes, hotel bed taxes are all about capturing revenue from visitors. So it is absolutely fair to ask those who are traveling to Juneau to pay more."
Opponents of the proposition — and some Assembly who nonetheless have endorsed it — say the seasonal sales tax will put an undue burden on locals who make large purchases during warmer months such as building materials for major projects. Hale noted other Southeast Alaska cities including Ketchikan, Sitka and Skagway have already implemented seasonal sales taxes that residents have adjusted to.
Arguments in opposition
In addition to being an overall tax increase, opponents say the shifting rates will be confusing for residents and impose difficulties on businesses via more complex sales tax collection requirements. Rodell said she also believes proponents aren’t properly evaluating the impact of the higher rate on locals.
"First of all, April 1 is when you see the increase on the seasonal sales tax rate," she said. "The first ship doesn't arrive until April 27, I believe. So you've got a full month there, practically speaking, where this is just on residents. And then you start thinking through how the seasons work locally. Whether you're a contractor (or) commercial fisherman…you could probably buy up supplies ahead of time as long as you know about it. But when you're building, things come up you don't know about. You open up a wall and you may find something that you weren't expecting to find.…So there is stuff happening throughout a very big season and contractors would be like ‘Yeah, I'll pay the 7.5%, but I'm passing it along to the people who live here because they're the ones consuming that service at that time.’"
Rodell said she also believes tourists shouldn’t be taken for granted, since many are already spending less during port stops — and daily passenger limits set to take effect next year means there might be fewer of them.
Also, she said she objects to taking away the ability of locals to have a regular say in whether to renew most of their local sales taxes.
"The voters have said they like the accountability of coming back for a review on the sales tax, but they‚re making this one permanent," she said.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
