One of the vetoes Governor Mike Dunleavy made, again, when he signed the operating budget on Monday was a cut worth $48,910,300 for reimbursing school bond debt. For many cities, towns and boroughs, that means taking on that cost in their own local budgets.
One place they may look to close gaps: property tax rolls.
The governor’s veto halved the amount of money the state will reimburse for school bond debt. The way the program has long worked is that for parts of Alaska with a sizable tax-base, communities would borrow money through long-term bonds to get enough cash for renovations that go above and beyond what you’d put in a regular school operating budget.
“If you’re putting new roofs on, or replacing boilers and HVAC systems, those would be major infrastructure improvements to extend the life of the buildings,” said Jim Anderson, Chief Finance Officer for the Anchorage School District.
Currently, ASD is working with the city to figure out how Anchorage will absorb $20,538,645 it didn’t expect to be on the line for. Traditionally, the state would reimburse local governments for their school bond debt at somewhere between 60 and 70 percent of the construction project, according to Anderson. That means decades ago, when these bonds were approved by Anchorage voters, they would know that of the full amount for a construction project, local taxpayers would ultimately be covering around a third of it. It was understood that under the Bond Debt Reimbursement appropriation would pay for the rest.
There was a modification to that system when the bottom fell out of the oil market. Because of revenue shortfalls, in 2015 the program was put on a five-year pause. Since then, when cities like Anchorage voted to take on bond debt knew they’d be shouldering the full burden, up until 2020 when the moratorium was set to expire.
But now, it’s unclear if the state’s prior generosity will return when it comes to helping school districts finance major improvements.
“I would think within the municipality there would be a lot of discussions as to how we move forward,” Anderson said.
Since the action does not affect ASD’s operating budget, the reductions won’t be felt in classrooms, but more likely by property owners. For the city’s tax-base, $20.5 million breaks down to about $60 more per every $100,000 of assessed value for a home, according to the municipality’s budget office. For the average single-family home-owner, that equates to roughly $200 dollars more on his or her tax bill next spring.
However, no decision has yet been made on whether that’s the route the city’s administration and assembly will take.