The Tax-Cap Initiative and Mayoral Politics

On April 7 2009, voters will take to the polls to elect a new mayor and vote for an initiative that would recalculate the tax cap.

There are some jaded people out there that believe the two occurring in the same election cycle is not a coincidence. The formulation of the tax-cap was altered back in 2003, and despite the Assembly being dominated by self-proclaimed fiscal conservatives, there was never an effort to return to the original formulation of the tax-cap... In fact, the restrictions on the tax cap got looser.

Now we have about 15 people running for mayor. The three early front-runners were Eric Croft, Shelia Shelkregg, and Dan Sullivan (in order by last name, just in case you think there is a subliminal message by putting someones name first...) and as the field started to grow, the chances that there was going to be a run-off election grew as well (you need at least 45% of the vote to be mayor of Anchorage).

Croft and Shelkregg are going to split the liberal vote, so probably one of them will not make it through to the run-off, but with all of the candidates in the field there was no way to know if Sullivan, the conservative, was going to survive election day.

So the conservative needed a 'red-meat' issue that would ensure that Dan Sullivan made it past election day, and maybe, would be enough to forestall the run-off.

Enter the Tax-Cap initiative.

Now the conversation for this campaign has been set; all of the candidates have stated they are for the passage of the initiative. No mater what the candidates real records are, Sullivan is going to cast himself as the real fiscal conservative and all the other candidates as the imitators, voters flood to the polls so they can pass the initiative, and next thing you know, Sullivan is mayor.

The only problem is passing the Tax-Cap initiative would be fiscally irresponsible.

Lets look at the full picture here. We had a deficit of $17 million, the initiative would reduce the cities revenue by $5 million for the next three years, inflation in Anchorage increased at the highest rate (4.6) in 20 years. Also, with state oil revenue down its safe to assume that revenue sharing is going to take a a huge hit. The only possible silver lining when it comes to paying for municipal services might be some provisions of the recently passed stimulus bill, but I don't what, and it will probably not be enough.

Of course, people will just say "Trim the fat from the budget." But we are already cutting to the bone. We are not going to fill 10 fire-fighter positions and we have postponed a police cadet training academy. That means less coverage on public safety and runs the risk of firemen and police officers having to do to much overtime to maintain a high level of effectiveness. And that will just be the beginning once the Municipality has to trim another 15 million, looses revenue sharing-funds, and has to factor in the increased inflation.

And lets not forget that the Municipal Taxpayers League of Anchorage website is incredibly deceptive. While it is correct that the Anchorage property tax payer pays some of the highest property tax rates in the country, if fails to mention that the tax-payers overall burden is one of the lowest. They also mention that the municipal budget has increased 55% over the last five years, leading readers to think that is coming from property taxes. False. There has been a huge increase in non-tax revenue, from about $94 million in 2003 to $180 million in 2008.

If you are the average home owner you are looking at a savings of about sixty cents a day. You could save more if you made sure your car tires are properly inflated and you drove the speed limit. There are probably a dozen wasteful things you do every week that you could cut out and save more money than this initiative would save.

But if you are one of the jaded I mentioned earlier, you know that initiative is not about saving money. If you wanted to talk about saving property owners money you would be looking at the fact about 30% of Anchorage property tax-base is exempted from taxes, with most of the exemptions crammed down the municipalities throat at the state level.

Is not about saving tax-payers money, its about manipulating voters before they go to the polls. And that's called politics.