As the municipality of Anchorage ponders ways to generate more revenue, Anchorage Mayor Ethan Berkowitz made the pitch Monday to the Anchorage-area legislators that some of the revenue from the Alaska Permanent Fund should go directly to communities.
Berkowitz suggested such a “community dividend” would help local governments handle the gaps left by dwindling state funding, help the state’s overall financial situation by allowing it to offload more services to potentially more efficient local governments and help reduce the burden on local property tax payers.
He pitched it as a 45-45-10 split where 45 percent of structured draw from the Alaska Permanent Fund would go to dividends, 45 percent would go to state government—about $1.4 billion apiece—and 10 percent—or about $300 million—would go to the proposed “community dividend.” That new dividend would be disbursed to communities throughout the state, similar to how the waning community revenue sharing program works.
“That’s roughly $300 million to local government. Anchorage’s share would be roughly $120 million of that. If there was $120 million flowing into the municipality of Anchorage, we could do things like pick up bond debt reimbursement, that’s about a $20 million cost to us this year,” Berkowitz said. “We could do more capital projects than we have done in the past. We could look at taking over maintenance and operations of state roads inside the bowl. We could assume some additional law enforcement capacity that we haven’t done in the past. Those are conversations that we can have in the future … but you can look at cutting the state budget at the same time the municipalities are absorbing those responsibilities.”
He also noted that funneling some of the money to local governments could lead less strain on property taxpayers. The Anchorage Assembly is currently considering several revenue proposals with one being a 3 percent sales tax that would fund public safety with the remainder going to offset property taxes.
The key driver behind both the community dividend and the Anchorage Assembly’s consideration of additional taxes is the vanishing of state support for local governments. Assembly Chair Felix Rivera explained in an editorial published in the Anchorage Daily News that Anchorage received an average of $85 million annually between 2005 and 2014. Since then, he explained, the state support has dropped to an average of $4.5 million annually.
“That’s a story that many cities, towns and villages across the state can relate to, and it’s why we need to have a serious discussion in the municipality,” he wrote. “What do we want to look like in 2020 and into the future? What services are important to maintain?”
The idea of the community dividend, which has been percolating in Alaska politics for years, was met mostly with plenty of questions from legislators and a fair amount of skepticism.
Rep. Andy Josephson, D-Anchorage, said the plan appears to just be shifting pieces around without really solving the underlying problem that there’s simply not enough money to go around. He said the Legislature’s approach of tapping the permanent fund has left other sources of new revenue untapped.
“I need to learn more and look forward to doing it about why this isn’t sort of a game of Whack-a-Mole in that if we still have the same chess pieces on the table the burden isn’t eased on you,” he said. “In other words, if you’re bearing these other burdens like state roads and maintenance then what’s the net difference?”
Berkowitz noted that Anchorage could likely do many of the services that the state provides in the Anchorage area more efficiently than the state.
Other legislators warned against suggesting what the split between state funding and the dividend would be under the plan, noting that the Legislature is still far from settling that issue let alone considering this new one.
Rep. Zack Fields, an Anchorage Democrat who’s been critical of the city’s handling of homelessness issues, appeared to be the most receptive to the idea. He noted that Anchorage residents are already paying high taxes while it’s still struggling to tackle issues with public safety and homelessness.
“We’re taxing to the cap. I pay a lot of property taxes and I’m happy to pay every dollar because I get good value, but my takeaway was: The state has reduced its support for municipalities so much that we can tax to the cap, we can pay a lot in taxes and we can have a really strong assembly and mayor, whose number one priority above all else is public safety, and we still don’t have adequate public safety,” he said. “To me, there’s this inexorable relationship where we’re going to have higher property taxes and inadequate public safety until and unless the state resumes its historic support for municipalities. … Thanks for pushing it because it’s sad to see that in our community.”
The legislative session is set to begin on Jan. 21.