Fairbanks North Star Borough Mayor Byrce Ward and city of Fairbanks Mayor Jim Matherly came together Tuesday night to talk about the impacts of state budget cuts and internal revenue caps have on city and borough services.
The event was organized by Ritchie Musick of the American Association of University Women and co-sponsored by the AAUW, the League of Women Voters of the Tanana Valley and the borough library.
Ward went over several technical aspects of the borough’s tax revenue cap. He explained that the cap does not limit total revenue and does not cap property taxes. Rather, it places a limit on how much tax revenue the borough can collect all together.
He went on to say state reductions to school funding could result in the borough being forced to cut services or even entire departments to make up for the lost income.
“It’s complicated in Fairbanks,” Matherly began.
Matherly largely deferred to city Chief of Staff Mike Meeks, who explained how the city’s mil-rate tax cap-within-a-cap worked. The cap essentially sets the city’s mill rate to 4.9 mills. It is the second of two caps, and the option to remove it was voted down by the city council in July.
Additionally, Meeks addressed several complaints the city regularly receives about budgeting. Regarding the suggestion that the city should simply spend its approximately $130 million permanent fund, Meeks explained that the city can’t touch the fund without the agreement of all six city council members and 70% of the voting public.
Further, Matherly explained, Fairbanks receives revenue from the interest this fund creates. Spending the balance may serve in the short term, but would reduce revenues overall. “It’s really saving our bacon,” he said. “I don’t want to touch it.”
Meeks also briefly but firmly refuted claims that the city spends too much money, is unwilling to solve budget problems creatively and has too many employees. “We are not growing our budget. We cannot even keep up with inflation,” he said. He then explained that many of the suggested solutions to cutting the budget, like removing garbage service, would cost residents more money.
Audience members submitted questions to the mayors. When asked whether they would consider consolidation, both Matherly and Ward felt that the option was not an attractive one. Ward pointed out that a merger would likely cost the entities more than anticipated as there would be a need to increase services outside the city. Alternately, he said, a lowering of services inside the city would have to occur, or a service area would need to be created.
When asked about ideas for raising revenues outside of taxes, Ward said that the borough was working to sell some land that was granted to it and Matherly suggested user fees.
Contact staff writer Cheryl Upshaw at 459-7572 or find her on Twitter: @FDNMcity.