As Alaska grapples with the changing role of oil in the economy, and as the state government flails in its efforts to solve the state fiscal crisis, Anchorage has been an island of stability in the storm. Through prudent management, refinancing and revenue diversification, we have maintained and strengthened our AAA bond rating — which is the highest possible for a municipality and reflects the confidence that financial markets have in our fiscal strength. Aside from increases to APD, we have reduced the size of government and produced balanced budgets.
Though we are not completely insulated from state economic trends, the strength of the Municipality’s fiscal management translates to a positive investment environment, and business development in Anchorage. In 2016 and 2017, Anchorage voted for approximately $150 million of bonds, to maintain and improve our streets, infrastructure and schools. This willingness to invest in ourselves in combination with the attractiveness of our city has helped bring hundreds of millions of dollars of investment, despite the Alaska recession and changes to the national economy. The Municipality has specifically created public-private partnerships that will generate approximately $300 million of development. Furthermore, by streamlining permitting and focusing on results, we have spurred housing starts to increase almost by a third between 2016 and 2017.
Historically, Anchorage has relied heavily on property taxes to cover city expenses. This reliance places a disproportionate tax burden on homeowners, and it exposes the city to risk associated with dependence on a single revenue source. For this reason, my administration has put forward a proposal to increase the residential property tax exemption from $20K to $50K, which will lower residential property taxes by an average of 10% — the average home will see property tax reduced approximately $400. The increased property tax exemption will offset the gasoline tax– which is a user fee designed to make sure that visitors and commuters also bear a share of costs they generate. As a result, the municipality’s financial position will be diversified and strengthened — and further insulated from the precariousness brought on by the state’s inability to solve its fiscal crisis.
In addition, our proposed sale of ML&P to the ratepayer controlled Chugach Electric Cooperative will allow us to pay off $542 million dollars in ML&P debt liability and invest approximately $300 million in the Municipality of Anchorage Trust and pay down other Municipal debts. At the same time, the deal is structured to protect taxpayers by preserving ML&P’s existing property tax contribution under tax cap. Importantly, rates will not rise as a result of this transaction, and Chugach predicts hundreds of millions of dollars of rate payer savings over the next years as Anchorage reaps the benefit of efficiencies.
At the same time, the Municipality is partnering with community organizations and the Alaska Department of Labor and Workforce Development to innovate and make it easier for residents to find and connect with jobs. We are also working with schools, technical colleges and UAA and APU to expand workforce development opportunities.