A section of Anchorage Municipal Code that only a few months ago neither you, nor I, nor many Assembly members, nor (according to some) the Berkowitz administration even knew existed, may end up being the defining issue on the Anchorage ballot come April 4.
The issue is the Muni’s spending cap, no, not the very well-known and often fought over tax cap. This is the municipal spending cap.
Did you know such a thing existed? I didn’t. Even Assemblyman Bill Starr said at the November 15th Anchorage Assembly meeting, “I admit I had no idea we had a spending cap that was different from the tax cap. It was all new to me.”
The current statutory spending cap dates back to 1983, from the same time the tax cap was being formulated. There are some who say the Assembly never intended to have both the tax cap and spending cap, but after the tax cap was approved by voters the Assembly just never removed the spending cap from the books. As Assemblyman Bill Evans said “It was presented as a vestige of something that should have gone away a long time ago. It was like a housekeeping issue and they didn’t take care of it.”
Bob Griffin
So in the code the spending cap sat, apparently without notice. That is until, according to Anchorage Budget Advisory Commission member Bob Griffin, he started asking questions about it earlier this year.
In an interview, Griffin told me “We’re not really sure how many times it has been triggered because, you know, I serve on the Budget Advisory Commission and we asked OMB to give us the history of the spending cap and what it has been for the last 15 years. Before they got back to us, this ordinance popped up to suspend the spending cap. I don’t have hard data on that, but I’m kinda thinking they didn’t even know about it until the Budget Advisory Commission asked for the information.”
The ordinance Griffin references was one offered (and then voted against) by Evans to suspend the language of the spending cap for one year in order to give the Assembly time to reacquaint themselves with it and formulate and pass changes.
According to the language in that ordinance, the Berkowitz administration had told the Assembly that if the cap were to be enforced in this coming year’s budget, the Muni would have to cut another $9 Million in spending to comply with it.
The Assembly passed that ordinance by a vote of 8-3.
According to Griffin, that was when he and other spending hawks including former Mayor Dan Sullivan and former Muni OMB Director Cheryl Frasca, decided to take action, “So a few days after they did that we submitted our ballot initiative to bring the spending cap back. Not only to bring it back but to take it out of code and put it in the charter and add some additional protections to strengthen the spending cap.”
By moving the spending cap language from Municipal Code to the Municipal Charter, future assemblies would no longer be able to ignore it by simply passing an ordinance. Only the voters can decide whether something in the Charter is out of place.
Griffin and his crew were able to submit an application for a ballot initiative the very next day, November 16. On December 5th, that application was approved by the Municipal Attorney and Clerk’s Office.
Now Griffin and his team can start gathering the required 5,754 signatures of registered Anchorage voters before the February 1st deadline for issues to appear on the spring ballot.
Griffin says he isn’t worried about getting those signatures. He told me when this same group organized to get last year’s tax cap initiative on the ballot they were able to get about 1,000 signatures a day. This time they will start slower but he said “we can ramp up again if necessary.”
So what exactly does the spending cap say and what will its impact be if enshrined in the Charter? The first question is much easier to answer.
Here is the language as it currently appears in Muni Code:
“Per capita expenditures in the general government operating budget for tax-supported services shall be increased over the previous year’s budget by amount no more than the percentage increase in the July CPI over the previous July CPI and those additional increases necessary to provide voter and legally mandated services.”
And here is the similar but slightly more robust language offered by Griffin and Sullivan’s suggested Charter change:
“Total per capita expenditures, in the general government operating budget, including any amendments or supplements, may only increase over the previous year’s approved budget by an amount no greater than the percentage change in the July Anchorage CPI over the previous July Anchorage CPI. Not subject to this limitation are amounts to pay debt service for voter approved bonds, legal settlements and judgments, expenditures by limited services areas, an emergency ordinance enacted pursuant to Charter section 10.03 and grants from non municipal sources.”
What impact that move will have on city budgets going forward isn’t clear. Griffin cast the language as simply a “backstop” to the tax cap that only kicks in “when the politicians start to get really creative on ways to bypass the tax cap.”
Mayor Berkowitz, however, says the initiative will make Anchorage less safe if passed. In an email the Mayor’s Communication Director Myer Hutchison attributed the following statement to the Mayor:
“Given the investments needed to rebuild APD, past responsibilities incurred for SAP (the past administration purchased SAP, but arranged for future taxpayers to pay the bills), and a broken fiscal relationship with the state, the spending limit initiative as proposed would have a negative impact on public safety.”
According to Evans, though, the Berkowitz administration has offered more detailed criticism of the spending cap. In an email he said:
“The administration indicated that the formula for calculating the spending cap created problems in a situation in which the population of Anchorage declines and they also complained that because the formula was not averaged over a 5 year period (like the tax cap) it was subject to cause more dramatic impacts. There were also some questions posed by the administration as to whether there was any value in having both a spending cap and a tax cap”
This discussion of the impacts of a spending cap and the necessity of having both a tax cap and a spending cap will no doubt be a huge issue in the elections April 4.
Griffin says while his group hasn’t yet begun raising money to support passage of the spending cap initiative, he has already heard from several groups interested in being a part of the fight, including former Assemblyman Dan Coffey and his PAC, The Truth Alaska.
As we reported during last year’s Muni elections, Republican polling showed the only issue that helped their candidates at the polls was the tax cap. Look for them to try to duplicate and expand on that theme this year in an effort to regain and governing majority on the Anchorage Assembly.
The Administration is opposes our ballot initiative because it will limit their
ability to use techniques to by-pass the Tax Cap and increase spending much
faster than the local rate of inflation. The specific concern they have mentioned with our improved version the Spending Cap is that it will limit their ability to increase the number of public safety workers. In fact, the biggest obstacle in increasing the number of public safety workers has been the inability to control public safety labor costs within reasonable parameters.
In 15 years the average taxpayer cost of a public safety working in Anchorage went from $77,784/year to $161,909/year. In 2001 the total cost of pay and benefits for the 865 members of the police and fire department $67,283,580. By 2015, the taxpayer cost of pay and benefits of 902 police and fire department employees had risen to $146,042,278. On a per employee basis, that’s a 108.2% increase in the cost of labor (an average of
7.2%/year) during a time period that local inflation was 33.8% — or an average
of 2.3%/year.
Even though the growth in the number of public safety employees between 2001 and 2015 lagged significantly behind the growth in municipal population, the overall percentage
of the Muni budget dedicated public safety labor costs increased from 25.2% of the
budget in 2001 to 29.9% of the budget in 2015.