PALMER -- If the Matanuska-Susitna Borough waives registration costs for old-car owners, the resulting drop in revenue could cut more than $2.4 million from road and fire service areas in Alaska's fastest-growing region.
The state's new permanent vehicle registration law waives biennial fees and taxes for people who own trailers or vehicles that are at least 8 years old after they register one last time and pay a $25 fee. Originally sponsored by Chugiak Rep. Bill Stoltze and based on a Montana law, the program goes into effect on Jan. 1.
Local governments must opt into the program by passing an ordinance. Anchorage -- Alaska's old-car capital with almost 199,000 vehicles 8 years or older -- isn't biting yet.
So far the Mat-Su has been the only government to express interest, Stoltze said Tuesday morning at a press conference with Mat-Su Assembly members Jim Colver and Matthew Beck.
Colver plans to introduce a permanent vehicle registration ordinance at the Aug. 5 Mat-Su Assembly meeting. The ordinance will get a public hearing on Aug. 26 if approved for introduction.
Here's how it would work, at least in the Valley: Starting in January, an owner registering an old vehicle or trailer would walk into the DMV, shell out the $100 state registration fee and a $70 Mat-Su tax, tack on $25 -- and never have to register it again.
According to the Division of Motor Vehicles, the Mat-Su has just over 86,000 vehicles at least 8 years old -- nearly as many vehicles as the roughly 96,000 people who live here.
The potential loss of all those registration dollars would deal a heavy blow to service areas funded by local property tax dollars, according to a fiscal note included in a packet handed out Tuesday.
If all those old-vehicle drivers stop registering them starting next year, the borough anticipates a more than $1.9 million reduction in revenue over the next two years to its three cities, eight fire service areas and 16 road service areas, among others.
Jim Norcross, a Willow resident, called the proposal well-timed for campaign season. Both Stoltze and Colver are running for office, Stoltze for a new Senate seat that runs from Chugiak to the edges of Wasilla and Colver for the House seat currently held by Chickaloon Rep. Eric Feige.
Norcross, who serves on the advisory board that oversees road service areas, said Valley residents need to realize the potential for higher property tax rates if Colver's proposal passes.
"It's a political move because he's going to use that to buy votes: 'Look, I'm gonna save you money ... you only have to register your vehicle one time,' " he said Wednesday. "Are you telling the taxpayer we're going to have to increase your mill rate down the road to offset that?"
The three elected officials at the press conference Tuesday, however, downplayed the potential hit the borough could take from lost revenue if the Assembly approves a permanent registration program here.
Stoltze said he developed the legislation initially as a statewide policy, and that it stemmed from his desire to give people with boat or snowmachine trailers the same registration breaks that commercial trailer owners get.
His bill passed despite pressure from the Alaska Municipal League, Stoltze said. "If it starts with the Mat-Su, that's a good start."
Beck described the borough's financial situation as healthy and said he expected the registration ordinance to be "popular among residents."
Colver described a gradual revenue reduction, calling the fiscal impact "minimal" and potentially offset by commuters moving to the Mat-Su with newer cars. Older-car owners also might not take advantage of the registration break, since they run the risk of paying the extra $25 only to have the car break down or be sold.
"It's a tough balance that the Assembly faces, bringing money into government coffers or leaving it in residents' wallets," he wrote in an email Wednesday. "In this case, I think many Mat-Su residents own trailers, a snow plow, an old truck for the dump. Taxing these every two years seems excessive."
Over an eight-year period of vehicle ownership in the Mat-Su and Anchorage, someone who starts with a new vehicle pays a total of $1,060 in local registration taxes, according to a spreadsheet from Stoltze aide Darrell Breese. That's the third highest in the state: Bristol Bay vehicle owners pay $1,105 and Unalaska owners shell out $1,475.
Nobody likes paying registration fees and taxes, but now's not the time to cut them, said Toby Riddell, the supervisor for the Knik Road Service Area, the largest in the borough with more than 300 miles of road.
The Mat-Su is reliant on property taxes and lacks a big money-maker like a successful port, even as its growing population demands more services.
Borough government has been on shaky ground financially for several years now, Riddell pointed out. "The borough will be in dire straits if this keeps up."
If approved, the registration tax break would cut $85,000 from the Knik road service area by 2017, according to borough estimates. That money would be used for grading, cutting back brush, signs and even paving projects for an area that stretches from Knik-Fairview to Point MacKenzie.
The cities would take a hit, too. Wasilla would get $39,000 less in registration revenue, Palmer about $28,000 less and Houston about $9,500 less, according to the borough prediction.
The Wasilla Lakes fire service area, the largest and busiest in the Valley, could see a more than $58,600 reduction within two years, the fiscal note shows. Other fire service areas such as Butte and Willow would see smaller reductions.
Dennis Brodigan, the borough's emergency services director, said he first learned about the permanent registration proposal at a staff meeting Tuesday and called it problematic.
"Especially in our outlying areas that have very low mill rates for the services to begin with," Brodigan said Wednesday. "We can barely balance the budget at the end of the year with three or four of our services. Anything that negatively impacts that is going to hurt."
The reductions could also cut into funding for dust control in a place with a huge network of gravel roads: of nearly 1,400 miles of constructed roads in the Mat-Su, only 384 are paved. If approved, reduced registration revenue is expected to cost the borough $473,000 in dust control money.
The borough uses the money as a match for road service area funds to do paving or apply calcium chloride periodically on busy unpaved roads to keep dust down, public works director Terry Dolan said Wednesday.
"There's a lot of gravel roads and there's a lot of people, especially in the springtime after the snow melts; that's road dust season," Dolan said. "Because we have so many miles of gravel roads, the calls come in. In the springtime, people want their calcium chloride."
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