Comment of the day: School lawsuit exposes how large portions of Alaska refuse to tax themselves

Here’s Lynn Willis on Superior Court Judge William Carey’s ruling that says local boroughs and municipalities are not required to pay a specific percentage of what they collect in taxes to pay for local school funding. Carey ruled that such mandates act like a “dedicated fund,” which are unconstitutional. During the campaign, Gov.-elect Bill Walker said that he supported the Ketchikan lawsuit that challenged the local funding mandate:

Regarding the school tax decision, I appreciate Bill Walker’s support of this litigation if his intention was to have this court decision finally force the issue the ability for large portions of Alaska to refuse to form local taxing authorities. John Havelock’s commentary in the ADN published today (25 Nov) speaks to this issue.

What is the motivation to form a local taxing authority when the Alaska Constitution actually discourages such action in Article 10 (Local Government) Section 6 ( Unorganized Boroughs) which states:

“The legislature shall provide for the performance of services it deems necessary or advisable in the unorganized boroughs, allowing for maximum local participation and responsibility. It may exercise any power or function in an unorganized borough which the assembly may exercise in an organized borough.”

Currently approximately half of my Anchorage property taxes are dedicated to fund local schools.

Of course I would like to see a property tax reduction as a result of this court decision yet I understand with our pending fiscal crisis that option is unlikely. Now if the state assumes its’ constitutional authority to fund schools per Article 7 Section 1, shouldn’t that almost double the amount of money available for local expenses and wouldn’t my property taxes be able to offset the pending loss of state revenue sharing funds?

As an alternative, how about we start now to seek alternate local revenues from a broader payer base? We know how of how much property tax revenue we actually spend on City/Municipal services. Why not have a debate about lowering property taxes to reflect the impact of this court decision yet consider making up the loss of State revenue sharing and perhaps future bond payments by use of a local sales tax?


8 thoughts on “Comment of the day: School lawsuit exposes how large portions of Alaska refuse to tax themselves

  1. joe blow

    Interesting subject – there are some very big villages and towns that pay exactly nothing for their schools. Let’s take Pt Hope as an example. Town of about 700, K-12 school that must have close to 300 students. No local taxes, the school is entirely supported by state and federal funds. The people of Pt Hope have no qualms at all accepting this largesse while simultaneously arguing against the oil development that pays their bills.

  2. Richard F.

    This is an example where Walker has, in my opinion, already stepped in it. On the campaign trail, he spoke on both sides of the issue. Now, as Governor, I hope he has the intestinal fortitude to appeal the case to protect us from the negative fiscal impacts. This will be one of the real test cases to see if Walker is a leader or a pansey of the NEA.

  3. Lynn Willis

    We got used to having a “free ride” with oil revenue. The ghost of Roger Cremo is haunting us now as he was one of the first to propose zealously harboring our revenues from non-renewable resources and only living off the investment income. Our short-sighted politicians directly spent the revenues from non-renewable resource production or counted on cash reserves to see us through till the next “boom”. They just tried that again and I predict they will soon realize they have indeed squeezed the golden goose to death. Now the solution requires, not millions of dollars, but billions of dollars just to keep our heads above water and that will only buy us time if they don’t finally come to grips with what is facing us and what they have done. You and I argue about the probability of the AKLNG project yet even if it was here today the estimated three billion to four billion dollar income could not return us to the halcyon days of fore when TAPS was at its’ zenith. I suspect the next tactic by our “leaders” will be to collateralize the corpus of the Permanent Fund for support of bonded debt.
    We have the same fundamental problems that proceeded the oil boom which include the Constitutional obligation of the state to provide services for those who refuse to tax themselves; lack of a large enough population to generate significant state revenues from any local taxes we might impose and the fact that we are still spread out over God’s half acre. Now we have added another problem which is the practice of masking ,by state spending, the reality of local economic viability and to also mask any need for local revenues to provide government services.
    The western “ghost town” used to be the indicator of local economic viability even in Alaska (e.g. the city of Iditarod) and now that mechanism is poised to return to Alaska. I don’t think your use of the term “disaster” is inappropriate.

  4. Jon K

    Thanks Lynn. I still don’t understand why Alaskans think the state needs to pay for virtually every service provided by the government. The free-rider mentality is profoundly disturbing. I would also add that at Statehood we had an income tax, so residents were paying for the education provided by the state. If we burden the state with even more costs the economy will suffer, our education system will deteriorate, and the state will have to cut back on vital services – health care, troopers, environmental enforcement, etc., etc. What a disaster.

  5. Lynn Willis

    Perhaps the question now is are we in the organized boroughs going to choose to tax ourselves to establish and maintain schools without a state mandate to do so while the remainder of the state, or those who refuse to tax themselves for schools in the other organized boroughs, receive a “free ride” ? Will those locally funded schools be limited to existing state constitutional restrictions?
    For the time being I would think all 220 million now is a state obligation. Note the designated responsible party, use of the word “shall”, and the mandate to establish and maintain schools in the first sentence of Article 7 (Health, Education and Welfare), Section 1 (Public Education), in the Alaska State Constitution:

    “The legislature shall by general law establish and maintain a system of public schools open to all children of the State, and may provide for other public educational institutions. Schools and institutions so established shall be free from sectarian control. No money shall be paid from public funds for the direct benefit of any religious or other private educational institution.”

    The founders of this state specifically mandated education funding as a legislative priority. I suggest that guidance will serve us well in this new era of fiscal reality in Alaska. Yes, this will probably be at the expense of some bridges, roads, dams, crime labs, sports arenas, rocket launch complex, and perhaps even equity partnerships in pipe line projects (and, God forbid, maybe even legislative travel and LIO expansions).

  6. Jon K

    If Walker doesn’t appeal, what does that mean for the state’s budget? Does the state now have to absorb all of those costs, which the ADN pegged at $220 million? If so, how does this play out?

  7. AH HA

    This is an interesting ruling. Since local governments are no longer required to providing funding how can they still be allowed to commit funds or to propose or develop a budget? I can just imagine… Juneau School District currently allocates about $17,000 per student per year with a goodly potion of that coming directly from local property taxes. because this is such significant portion of the CBJ budget it gets a lot of attention from the property owners and one hopes that this high profile helps to keep the spending somewhat under control. One can easily imagine that with no reality based constraints the district budget will quickly be over $20,000 per student per year. One can also see that it is a certainty that even with what amounts to a large monetary windfall there will be no lowering of the tax rates in CBJ.

  8. Anonymous

    End the property tax entirely. Do not even attempt to compromise with a partial property tax replacement, for we know that will lead to an increase of taxes (with or without a “tax cap”).

    Just do away with the property tax entirely. Thank you!

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