'I would expect that property taxes would definitely have to rise'—Lawmakers debate plan to end school bond debt reimbursement

Proposed budget cuts would stick the Mat-Su Borough School District with $39 million in debt otherwise covered by the state.

ANCHORAGE (KTUU) — Anchorage Mayor Ethan Berkowitz is pushing back against a House Finance vote to eliminate all school bond debt reimbursement across Alaska.

On Facebook last week, Berkowitz called out seven lawmakers who voted yes on the issue with the hashtags #costshift #callyourlegislator.

"I'm pretty old fashioned," Berkowitz told KTUU Monday. "You shake someone's hand on a deal, you keep the deal, and here, the state's trying to renege on a deal, and that to me is just unacceptable."

Berkowitz says Some of the bond debt is 10 to 15 years old. If the shift happens, it would mean an additional $120 property tax on homes with an assessed value of $150,000.

The financial impact would mean more than $43 million for Anchorage, $19 million for the Matanuska-Susitna Borough, $10 million for the Fairbanks North Star Borough, $8 million for the City and Borough of Juneau, $5 million for Kodiak, and several million dollars more for other cities across the state.

"There's a lot of old debt that's built into here, and now for the state to say 'Hey, times are a little tough for us, we're retreating from our promises,' that says it's a breach of an obligation," Berkowitz said. "If you want to convey the impression that you're open for business, that means you have to be honorable in how you conduct yourself in business. It is not honorable to walk away from an obligation."

Last week Rep. Ben Carpenter, R-Nikiski, argued for an end to the program, saying that things have to change.

"We've got a $1.6 billion dollar deficit and our economy is in recession," Carpenter said."It's obvious that it can't support the current spending levels that we have right now."

Berkowitz says that if the state wants to change the way school bond debt is paid, it should be for future projects, not for projects that happened several years ago for which reimbursement funds have been pledged.

Meanwhile, Rep. Lance Pruitt, R-Anchorage, says that if you look at the fine print, the state never guaranteed to cover the costs.

"I would expect that property taxes would definitely have to rise, but I think what you see is that while some people indicate that it may not be a savings — and I've heard that argument — I do think it's kind of the reality of our situation though," Pruitt said. "The state didn't make these obligations. The local municipalities made these obligations, but they asked us to participate in supporting it, and we did at the most that we could we."

A statement from the governor's office Monday evening echoed statements from House minority members, and says that attempts to reduce the state's school bond debt reimbursement payments pre-date the Dunleavy administration.

"When the public is presented with a school bond proposal they are told that any state funding for the project(s) is subject to appropriations by the legislature," Dunleavy spokesman Matt Shuckerow said. "While many recognize the benefits state funding has had on local communities, unfortunately based on current revenues and a desire to address our deficit the Governor believes the state is in the position to cover these costs at this time."

Berkowitz disagrees.

"What this amounts to is a massive cost shift to local tax payers because the governor and the legislature don't have the capacity to implement the revenue measures that are necessary to handle old debt," Berkowitz said.

This story has been updated to include a statement from the governor's office.

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