Anchorage Daily News

Public hearings on Anchorage's proposed $421 million city budget for next year got off to a bumpy start Tuesday, with a room filled with people waiting to talk about city spending first listening to a prolonged and sometimes bitter debate among Assembly members about how to use state money expected from the Legislature.

But first, the Assembly told the Anchorage School District to spend no more than 2.5 percent more property tax dollars in its next budget than it spent in the current year's. And the additional money -- up to about $4.8 million -- should be spent to help pay city expenses on school-related services like putting cops in schools and keeping high school pools open, the Assembly said.

After that initial step, the real fight came over how to use an estimated $15 million in revenue sharing money the city expects to get from the state next spring.

Mayor Dan Sullivan and a five-member Assembly minority want to use the state money to pay for city services over and above those covered by property taxpayers. The six other Assembly members, and Democratic members of Anchorage's legislative caucus, wanted the state money used to reduce the amount of property taxes the city collects.

Sullivan wants to collect about $10 million less in property taxes next year than is allowed under the city's tax cap and to use the $15 million in state money to pay for additional city services.

The six-member Assembly majority wants to be able to tax up to the cap if necessary, then use the $15 million in state money to reduce the property tax total by that amount -- for "property tax relief." That's been the practice since about 2004, former Mayor Mark Begich's second year in office.

Sullivan and Assembly critics of the latter plan say it will allow the city's tax cap limit to increase faster than it would otherwise. Using the $15 million to replace property tax dollars in 2010 will increase the base figure used to calculate the 2011 tax cap and for succeeding years, Assemblyman Dan Coffey said.

"Do we wish to be able to take an ever-increasing number of dollars out of the pocket of real property taxpayers?" Coffey said. "This is going to raise the tax cap this year and the next and the next."

Sullivan said using the state money to replace tax dollars rather than for extra services means the city will have less money to spend -- he guessed maybe $2 million or $3 million less -- and even more cuts than he's already outlined in a 2010 budget that would eliminate more than 190 positions.

But the wording of the revenue sharing resolution specifically says its use by the city shouldn't "impact the municipal tax cap calculation."

Assemblyman Mike Gutierrez, a sponsor of the measure, said the city should consider the state money a one-time event that the city may not get next year. Using it to pay for additional services one year might mean it's harder for the city to cover that spending the next year if state money isn't available, he said.

The revenue sharing resolution passed 6-5. Assembly members Gutierrez, Matt Claman, Elvi Gray-Jackson, Patrick Flynn, Sheila Selkregg and Harriet Drummond voted for it. Coffey, Bill Starr, Chris Birch, Jennifer Johnston and Chairwoman Debbie Ossiander opposed.

City officials also have told local state legislators that the revenue sharing would be used for tax relief, Gutierrez and other supporters said. "Giving every penny of this as tax relief" keeps that promise, Gutierrez said.

Others, including Claman, noted that the Assembly in recent years also has voted to use revenue sharing for tax relief, most recently in February of this year.

Sullivan could veto the resolution, and the six members who supported it Tuesday would not be enough to override a veto if he did. He wouldn't immediately say if he plans to.

After the debate over revenue sharing wound down, the Assembly began hearing public testimony on the proposed spending plan for next year. Almost 40 people had signed up to testify, and most waited around for their opportunity.

Travis Cox said Anchorage taxpayers are angry and getting hit from every side -- higher federal taxes, utilities raising rates to cover billing mistakes, and even the Assembly's decision a few minutes earlier to allow the school district to take 2.5 percent more tax dollars for what he characterized as a failed educational system.

Other speakers, however, argued that wise spending can help the city.

Mariko Churchill argued in favor of keeping about $280,000 available in city grants to theater and arts groups. "Artists that come in ... stay in our hotels, eat in our restaurants," Churchill said, adding that plays and similar events enrich the experience of living in Anchorage.

And others asked the Assembly to override Sullivan's proposed library cuts and shortened branch library hours, and restore that budget to 2008 levels. More than 20 people raised their hands, indicating their support.

"Keep the doors open at our branch libraries," said library supporter Brooks Chandler, who also urged the Assembly to include money to keep the library system's collection up to date.

A second night of budget hearings is scheduled for next Tuesday.

Contact reporter Don Hunter at dhunter@adn.com or 257-4349.

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