In this episode of Whistle Stop Mat-Su with host Patty Sullivan, Assembly Members Randall Kowalke and Ted Leonard and Borough Attorney Nicholas Spiropoulos lay out how the new Areawide tax cap of 10.5 mills differs from our recently dismantled tax cap formula.
"We've strengthened the tax cap and given assurance to the taxpayers ... We made School District funding a priority, investing in our children and at the same time giving them (the District) stability of funding," —Assembly Member Ted Leonard
Watch the show here. Listen to the conversation and learn the distinctions of the tax cap through this Whistle Stop Mat-Su April 2018 link.
The tax cap changed on April 17, 2018, when the Matanuska-Susitna Borough Assembly adopted a new fixed figure of 10.5 mills for five years. This means that the Assembly must adopt a mill rate at or below 10.5 mills until 2023. Last year's mill rate was 10.332. Under the new cap, areawide taxes can only increase about $45 total on a $250,000 home over five years or about a 1.6 % increase over five years. The Areawide mill rate is the rate of property tax on all areas within and outside cities. 1 mill is equal to $1 in taxes per $1,000 in taxable value.
The Assembly the same night approved a set portion of the areawide tax levies to the Mat-Su School District of 6.3 mills or 60% of the Borough areawide property tax revenue. For this year, this works out to be a $2.5 million increase in school funding over last year. Now, school funding will rise and fall with the assessed values just as funding for Borough operations will. The Borough assessed valuation has been growing for years, yet the demand for new infrastructure grows as well. If the repayment of debt on bonds sold for school construction projects is included, then school funding and school buildling funding make up 70% of our areawide property taxes.
Mat-Su students are not funded the highest per pupil in the State, but Mat-Su taxpayers pay the most for education. Several factors go into figuring out per pupil funding. One of them is federal impact aid. Anchorage and Fairbanks receive several million in such aid. The Mat-Su does not.
"As far as the percentage of education funding coming out of the mill rate, this Borough pays more than any of the others ... We are clear at this table on the percentage of your property taxes that are going to the School District and the mill rate, we are the highest percentage payers," —Assembly Member Randall Kowalke
"The challenge needs to be really stressed. When you are looking at how much our residents invest into our children it is higher than Anchorage or Fairbanks ... and it's due to the fact, this gets complicated, our composition of our base. Mat-Su is heavily oriented toward residential property whereas, for example, the Fairbanks North Star Borough gets to tax a portion of the pipeline. Anchorage has this very large commercial base. So one of our goals is to increase economic development ... so more of the funding can be taken over from residential taxpayers,"
—Assembly Member Ted Leonard
The Non Areawide mill rate (such as Animal Care and libraries) also has a tax cap of 0.6 mills. The Non-Areawide taxes are only for services provided outside the cities.
Service areas such as fire and road service areas cannot rise more than two percent a year without a strong need justified.
"That puts a lot of pressure on the Borough Manager to live within what remains ... Our Borough Manager has done a great deal with restraint on budgets in past years. We have a lock on the School District number. We have a lock on the tax cap. And what remains is going to be Borough operations, and I think it is going to be a challenge." —Assembly Member Randall Kowalke.
Under the new tax cap, all future bonding for roads or schools, for example, will fall outside of the tax cap and must be approved by voters who agree to being taxed additionally for the bonds.
Whistle Stop Mat-Su produced by Stefan Hinman with Mat-Su Public Affairs.