2012 Approved Budget Revenue Details
2012 Approved Budget Revenue Details
The Mayor is required to propose a balanced budget because the Charter prohibits the city from incurring debt without voter approval. As a result, the budget identifies $452.3 million in revenue from six major sources as displayed in Chart 3. Of this, $245 million (55%) is from property taxes.
Property Taxes - $245 million
The amount of taxes the Municipality collects is governed by a Tax Limit that calculates two numbers important to the budget and taxpayers:
- The maximum amount of all taxes that the city can collect; and
- The maximum amount of property taxes that can be collected.
The preliminary 2012 Tax Limit calculation shows that $287.0 million in all taxes can be collected (not subject to the Tax Limit is another $16.1 million in mill levies set by service area boards). This is a $9.5 million increase above the limit of all taxes that could have been collected in 2011. But at the same time, there is a $2.2 million decrease in the maximum amount of property taxes that can be collected in 2012.
The reason for an increase in one limit and a decrease in the other is the core of the Tax Limit’s design. Every dollar of a non-property tax replaces a dollar of property tax. The $3.8 million increase in vehicle registration taxes projected in 2012 automatically replaces $3.8 million in property taxes. Most significant, is the third and final year of phasing in Proposition 9, approved by voters in 2009, that put revenue from utility/enterprise payments-in-lieu-of-taxes under the Tax Limit. A total of $21 million in these payments will replace $21 million in property taxes in 2012.
The approved 2012 budget relies on $245 million in property taxes, which is $1 million below the maximum allowed under the preliminary 2012 Tax Cap. It is a $3.6 million (1.7%) increase from the amount of total property taxes collected in 2011. Table 3 describes the taxpayer impact per $100,000 of assessed property valuation.
|Property Tax Impact|
|Tax Per $100,000 Assested Value||$766.00||$775.00||$9.00|
|(Excludes Anchorage School District)|
Other Revenue - $170.5 million
In 2012 there is a $4.5 million increase in this category of revenue, which includes:
- State and Federal revenue;
- Other non-property taxes and interest earnings; and
- Program-generated revenue such as user fees.
State and Federal Revenue - $18.2 million
State Revenue – A total of $16.6 million is expected, primarily from a program by which the State shares revenue with local governments. In 2012 the same level ($15 million) is expected as received in 2011 (the Municipality also received $5 million in one-time funding in 2011).
Federal Revenue – A total of $1.6 million is expected, which compares to $2.1 million in 2012. Much of the difference is due to a $417,000 reduction in the Build America Bonds subsidy and $139,000 less in Payments-in-Lieu-of-Tax.
Other Taxes, Investment Earnings - $100.9 million
Revenue from other taxes that have substantively changed in 2012 includes:
Automobile Registration Tax – A total of $8.8 million is expected for an additional $3.8 million due to an increase in rates approved by the Assembly in 2010.
Tobacco Tax – A total of $20,950,000 is expected, which is a decrease of $350,000 when compared to 2011;
Motor Vehicle Rental Tax – A total of $5.2 million is expected, representing an increase of $420,600 in 2012;
MUSA/MESA – This is a payment-in-lieu-of-(property) taxes paid by municipal-owned utilities and enterprises. In 2012 these payments will total $21.1 million, which is $1.3 million higher than 2011;
Hotel/Motel Room Tax – A total of $21.6 million from this 12% tax is expected in 2012 for a $1.8 million increase. Revenue from the tax is split three ways—4% to tourism marketing; 4% for Dena’ina Center debt; and 4% to general government; and
Investment Earnings – This category of revenue includes interest earnings on management of municipal cash pools and a dividend paid from MOA’s Trust Fund (created with the proceeds from the sale of the Anchorage Telephone Utility). A total of $4.1 million in revenue is expected in interest earnings, which is $854,400 less than 2012; the MOA Trust Fund dividend will be $4.9 million, which is $100,000 lower.
Program-Generated Revenue - $51.5 million
This category includes fees paid for services, such as bus fare, land use permits, and fines (traffic tickets, late library books). This category of revenue provides $51.5 million in total revenue, which is $1.2 million less than 2011 due to the following:
Court Fines – A decrease of $720,000 is anticipated for a total of $3.8 million. The reduction is the due to a smaller Permanent Fund dividend projected for 2012, which will reduce the amount that can be garnished from those that fail to pay these fines;
E-911 Surcharge – A total of $6.8 million is expected in 2012, which is a decrease of $329,100 due to a leveling off in the number of cell phones; this compares to an annual increase of 3% in previous years;
Parking Enforcement Fees – A $432,100 decrease is expected due to APD no longer writing parking tickets downtown; the revenue now will go to the Anchorage Community Development Authority; and
Lease and Rental Revenue – There is a $203,400 increase from rental of municipal-owned property, which will bring this category’s total revenue to $464,200.
Intra-Governmental Charges (IGCs) - $28.7 million
In 2012, IGCs will generate $28.7 million in revenue which is $1.3 million more than in 2011.
IGCs are charges for services provided by one Municipal organization to another. For example, the Maintenance and Operations Department maintains all general government buildings. Maintenance costs are budgeted in Maintenance and Operations and “charged out” through IGCs to the appropriate users. By using an intra-governmental charge system, the full cost of a program—including overhead—is linked to the program. This system also allows departments to properly charge Municipal utilities, grants, and capital projects for services.
Fund Balance - $8.1 million
Several programs generate revenue that is placed is a self-sustaining fund to pay operating costs. For example, the Heritage Land Bank that gets revenue from the sale of municipal property; Development Services gets revenue from construction-related permits; the Dena’ina Center gets bed tax revenue to pay its debt service. A total of $4.0 million is expected to be used by such funds in 2012.
At the end of year unspent funds also fall into this category of revenue. These balances then are used to pay for the following year’s budget, which reduces the amount of revenue from other sources that otherwise would be required. For 2012, the budget proposes to use $4.1 million in fund balance that is anticipated to be unspent at the end of 2011 due to over-budgeting leave cash-out as discussed earlier.