1. Denali Borough prepares to meet future community needs with declining State support

2. Borough Revenue History
The borough was formed in 1990 imposing two taxes: an overnight accommodations (OA) tax and a severance tax on extracted resources.
The last time any tax rate was changed was years ago. At that time, the OA rate increased from four percent to the current seven percent.
Since 1995, there have been 12 different tax proposals/ordinances – all of which failed.
OA tax receipts account for 99% of all tax revenues and over 80% of total borough revenue.

3. Declining State Support
The primary program through which the State has supported its municipalities is the Community Assistance Program (CAP).
The program is currently not being “backfilled” and is in jeopardy of elimination.
In 2012, we received $708,000 in CAP funding, while next year we anticipate $210,000.
Other state programs the borough has relied upon for capital needs such as emergency apparatus, heavy equipment, and school facility major maintenance are also funded at such low levels that they are unreliable in meeting future needs.

4. Denali Borough Actions
The borough has actively worked to meet community needs regardless of state support:
Built Healy Transfer Station from our own funds
Established new Emergency Response Apparatus Fund and Grant Program to help meet EMS needs
Current non-profit grant funding levels far exceeds state support
Regularly fund our School District to the maximum allowable contribution

5. Current Funding Levels
Fiscal Year 2020 budget includes:
Total contributions to school district operations of $2,769,308
Total funding supporting community groups (non- profits/municipalities) in the borough of $797,947
Of that, $622,407 goes toward emergency response
Total revenue amount the borough collects and delivers to other organizations is $3,567,947.
FY 20 budget also funds accounts such as Capital Improvement, Major School Maintenance, and Parks and Recreation, at minimum levels.

6. Identified Future Needs
Street Addressing Project: staff time, software, signs
Parks and Recreation
Planning to submit shared path grant applications which require a 9% local match
New projects such as trails will likely include a borough maintenance component
Capital Needs
Identified Code and Life Safety Deficiencies at our three schools totaling $5,880,000
Planning for a municipal building to accommodate the borough, school district administration, and other functions
Solid Waste: covered storage, heavy equipment replacement, recycling facilities, and a new weigh scale
Land Enterprise: boundary survey work for potential sales

7. Education Funding
The current Required Local Contribution to the School District is based upon 2.6 mills of our Full Value Determination (FVD) which is an appraisal of all real and personal property in the borough. Our 2018 FVD was $364,104,100.
There is discussion in Juneau regarding changing that rate to 4 mills. Four years ago, our FVD went up by 32 percent. A re-appraisal is scheduled next year.
A yet-to-be proposed Education Omnibus bill, which intends to recalibrate the funding formula, will likely include an increased local contribution.

8. Alaskan Borough Tax Rates
Alcohol
Marijuana
Bed Tax
Sales Tax
Property
Anchorage 5 12
16.4
Denali 7
Fairbanks 8
14.95
Haines 4
5.5
10.7
Juneau 3
Kenai
4.7
Ketchikan
2.5
Kodiak
10.8
Mat-Su
10.3
Petersburg
$25/ounce
11.4
Skagway
3 winter, 5 summer

9. Comparison of two revenue options “To stay away from those right side columns, we need to look at the left columns”
5% new A & M tax
Conservatively estimated $415,000 new revenue
Higher administrative lift: new code language, additional oversight, added burden to staff
Advantage, even in lower visitor years
Residents and seasonal employees contribute
Benefit as substances have a social cost
1% OA tax increase
Anticipated $650,000 new revenue
No additional administrative burden
Even more unbalanced
Same group contributing
No change
Revenue
Admin
Divers-
ification
Partici-
pation
Health
Both options effective January 1, to allow for preparedness.
Either option would go to a popular vote in November 5 election.

10. Other Considerations
The Denali Borough plans to have a new online tax payment system in place prior to the effective date.
Should expenses exceed revenue in the coming years, as expected, the borough could spend down reserves. Where revenue is singularly weighted, maintaining a healthy fund balance is important. The last audit showed a $1.6 million unrestricted fund balance, which is healthy yet not excessive.
No tax is dedicated, all monies go to General Fund and are allocated annually by the Assembly. Both tax proposals state an intention to support grant programs to community groups such as fire departments and non-profits, which helps ensure these programs continue, while also creating opportunities to fund other identified needs.

11. Let’s keep the Denali Borough vibrant and healthy.
If you have any questions, feel free to call the borough office at
Or contact me, Clay Walker, directly at either or by at