Zak: Alaskans must resolve fiscal crisis now

The State of the City and why we need to advocate against State budget cost shifting and for agreeing on a revenue plan:

In Alaska we are faced with both a low value of oil as well as a low amount of oil coming through the line. The constitutional budget reserve will be completely depleted in FY 18. After that, Alaska’s current revenue structure will produce approximately $1.5 billion in unrestricted general funds (UGF), assuming oil price returns to $55 per barrel.

This is why we have to deal with the state fiscal crisis now; otherwise the opportunity will go away. No one is big enough to solve this alone. Together we need to develop a comprehensive fix to achieve stability. We need a revenue plan, which takes us to a sustainability plan. It is going to take the restructuring of the permanent fund, revenue generating taxes, modification of oil tax credits, as well as controlled spending.

A no-action plan budget is not the Alaska we want to live in, as the cost shift to our community would be significant.

• The budget would be one-third of the current FY 17 budget and only one-quarter of the FY 15 budget.

• Local education employment would fall from the current 24,400 to an estimated 10,000 statewide.

• School funding would be reduced to 32 percent of the current $1.25 billion, dropping to $400 million.

• Medicaid and other health formula funding would be reduced by 25 percent to maintain as much federal coverage as possible.

• All other health programs would be shut down, privatized, or significantly reduced. These include senior benefits, childcare benefits, homeless assistance, victim’s assistance, housing programs, pioneer homes, health clinics, public health labs, etc.

The magnitude of the revenue plan we are facing is smaller, leaner, tighter, fewer programs, and smaller capital budgets. We can no longer depend on the state to assist in funding our local governments. If we do not take action we will see a decrease in school bonding, as well as a decrease of PERs / TERs support from the state. We could also face retroactive requirements to pay for existing bond debt.

Cost shifting without a revenue plan will result in greater failure. In Homer as opposed to other communities, we are more fortunate in that we have a diversified economy. If the state does not raise revenues, raising revenues will get pushed to the communities to address the state budget issues.

Depending on the outcome of bond proposals already on the ballot, landowners in Homer could be faced with increased taxes for the new public safety building, waste services, as well as an increase in hospital service area fees.

 

Two of these bonds will only result in additional taxes if funds are not found within the existing Borough budget or raised through revenue from services provided, however the combined future burden on the taxpayer will be significant if we do not encourage our legislatures to solve the State fiscal crisis this year.

Even though there is a justified need to replace the existing police station and that I agree we need a solution, I am concerned that the proposed project at 12M may be too big for our city. When you consider where we are as a State and the associated cost shifting that may occur, it is quite a risk to take on an additional obligation at this time. There is also a high probability that the City of Homer will face additional increases to its operational costs and my concern is that we would be obligating our citizens beyond their means.

However, as the bond proposal is on the ballot on October 4th, and if the voters approve a $12 million general obligation bond (to finance the planning, design, and construction of a police station and related capital improvements by increasing by sixty five hundredths of one percent (0.65%) to five and fifteen hundredths percent (5.15%) from April 1 through September 30, for the purpose of paying debt service on the general obligation bond) then as your Mayor, I will stand behind their decision and will work hard to keep the costs low, and support in-state and local contracting.

 

As your Mayor I will work diligently to lead a team of dedicated City Council members. Thank you in advance for supporting me as your Mayor as we move forward together in the future. If you would like to learn more and would like to contact me you can reach me on my phone at 907-223-6681 and also visit my Bryan Zak for Mayor face book site at: https://www.facebook.com/electbryanzak/

 

 

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