Matanuska-Susitna Borough

How to Pay for Government Services

Mat-Su | Patty Sullivan | Wednesday, October 26, 2016

The Matanuska-Susitna Borough Assembly discussed Tuesday afternoon a range of measures for increasing revenues in an unstable State economy at a special meeting on “How to Pay for Government Services,” including a sales tax linked to a lower mill rate for property owners, among many others.

Borough Internal Auditor James Wilson gave a briefing on long-term budget projections, showing how unassigned funds have been routinely helping balance the Borough’s budget. Such uncommitted funds will be decreasing, he said. “We don’t have the financial health right now to increase services in one area unless you decrease services in another area,” Wilson advised the Assembly.

The State’s fiscal woes have been felt at the local government. Last summer, Matanuska-Susitna Borough Manager John Moosey addressed, through cuts and project delays, most of a $5.7 million shortfall in the Borough budget due to Gov. Bill Walker’s veto of State reimbursement of school construction bonds.    

Moosey said the tax rate for property owners has changed very little for the last seven years despite continuous growth in population and increased demands on government services.

Listen to the complete audio of the meeting posted here.

Download Wilson’s long-term projections here.

For more than an hour Tuesday, the Assembly raised questions on a list of potential revenue sources.

Here are a dozen sources mentioned:

• a sales tax linked to a property tax. Requires voter approval. The last ballot vote failed in 2009.

• an increase to the 5 percent bed tax for visitors. Requires voter approval, (the Anchorage room tax is 12 percent)

• the new, voter-adopted 5 percent marijuana sales tax, in place Borough wide, except in Palmer and Wasilla

• the business inventory tax, lowering the taxable inventory trigger from the $1 million threshold

• building permits and fees, the Borough does not have building permits

• the Land Management Fund, monies raised by fees and leases, recently has been tapped for emergency repairs

• reinstating the airplane registration tax, repealed in 2012

• the permanent vehicle registration fee. Owners of vehicles that are eight years and older pay one last registration fee. In 2015 estimates, the loss in revenue is $1.2 million less in 2017, $2.4 million less in 2018. 

• reducing some of the exemptions on property taxes for seniors and veterans. Up to $218,000 in value on a primary residence is tax exempt for this group. $2.34 million in less revenue in 2015.

• a plastic bag tax

• ambulance fees, improving the rate of collection

• an excise tax

• natural resource severance tax

Assembly Member Randall Kowalke said as a new Borough representative he is still learning the budget and understanding the various “puddles of money,” including what amount is in the reserves. The sum of all reserves today is $29 million, Wilson said. Moosey promised to routinely update the Assembly on the amount in the fund reserves. By code the Borough retains 22.2 percent of its expenditures in a reserve fund.

In late September, Fitch Bond Rating Agency and Standard & Poor’s pointed to this reserve fund as a factor in reaffirming the stable AA and AA+ ratings to the Borough, despite the State’s fiscal crisis.

The new voter-approved, 5 percent marijuana tax will bring in new revenue, though not as much as people expect, said Borough Manager Moosey. Since Oct. 20, the Borough has been accepting applications for conditional use permits for cultivation and retail facilities. Moosey said a best estimate now is $200,000 raised by that tax annually in the beginning of the industry.

Assembly Member Barbara Doty suggested improving the collection rate for ambulance services, reviewing insurance costs, and finding ways to save money. Doty mentioned that the recycling nonprofit, VCRS, is surveying to see if a plastic bag tax would be supported.

Assembly Member Randall Kowalke asked about reworking the inventory tax.

Assembly Member Matthew Beck suggested “busting open” the budget to understand it and looking at building permits.

Assembly Member Steve Colligan said some relief needs to come to the Borough property tax payer. He said the School District needs to be included in the discussion, which Assembly Member Beck supported.

Assembly Member Jim Sykes asked Auditor Wilson to amend his projections given steady growth seems more out of reach given the tough State economy. Sykes also supported diversifying tax sources.

Assembly Member George McKee said the land management fund  is used to “bank roll” our unexpected expenditures. Land Management funds come from fees and leases not from property taxes. Repairs to the port and the ferry have come from this fund with a promise to return the port grants.

Borough Mayor Vern Halter said for recent years the Borough budget has had a lot of red ink, yet the growing school district has requested budget increases, which will be very difficult to do in the future.

Assembly Member Dan Mayfield said the Assembly will have to think outside the box.

Photo: Internal Auditor James Wilson addressing the Assembly. Members Steve Colligan and Barbara Doty in image. Photo Mat-Su Borough Public Affairs. For more information, email Patty Sullivan, Public Affairs Director at This email address is being protected from spambots. You need JavaScript enabled to view it.



How to Pay for Government Services meeting audio