Mayor Ward vetoes Education Investment Reserve ordinance, override fails

FAIRBANKS, Alaska (KTVF) - On September 28, the Fairbanks North Star Borough Assembly voted on whether or not to create an Education Investment Reserve for the borough school district.

The ordinance, proposed by Aaron Lojewski and Jimi Cash, was designed to help stabilize the local contribution to education, the amount the borough provides to help fund the school district.

Over the last decade, the required local contribution to education has risen, even as enrollment has stayed flat or gone down. This is because, unlike at a state level, the funding isn’t tied to enrollment; but the taxable value of a community. According to borough Mayor Bryce Ward, “We’ve certainly seen increases in home values. I think we had one year it was up almost ten percent, and that considerably impacts the local contribution.”

The money for the reserve fund would come from cash investments to the borough, which stems from current property taxes. It would also come from revenue from land sales.

According to co-sponsor Barbara Haney, ideas for a fund like this have been brought forward as early as the 1990s and later in the mid-2000s. “The idea was if you could have a Permanent Fund-style item or fund, like they have in Valdez, we could then start to fund education from that, and it would take the pressure off property taxes.”

She argued that creating a reserve like this might spur the borough to proceed with land sales. “We have land just sitting there, vacant. It’s not generating any income. The borough has sold some of it at a loss.”

However, the benefits from this investment likely wouldn’t have been seen for decades. “It would’ve been for maybe 2060 or maybe 2070 that we would see that fund grow enough to cover the local contribution,” Haney said.

Ultimately, the ordinance passed in a vote of 5 to 4. However, that was not the end of the story, with Mayor Bryce Ward vetoing the measure on October 10. “I’ve vetoed less than a handful of items from the assembly. It has not been that many,” said Ward.

According to Ward, he vetoed the measure because he didn’t feel comfortable using taxpayer dollars this way. “The issue is that it took taxpayer dollars and stored them into this fund where the only benefit that the community would receive was from the earnings of that fund.”

Ward also objected to the timeline of the proposed benefits, which he says likely wouldn’t be seen for more than a decade. “It seems silly to be sticking money into a savings account that is paid for through taxpayer dollars when we have a shortfall in the budget currently,” he said.

The cash investment portion of the ordinance proved controversial, with Assembly Member Kristan Kelly also concerned about its potential impact to current borough operations. “The numbers just didn’t hold up in terms of how those funds are being used now in our budgets, in our budget cycles yearly,” Kelly said.

The funds being used for the reserve, according to Kelly, meant that either cuts would have to be made to the budget or taxes would have to go up. “Those are already used and dedicated in our budget, so what was lacking in the ordinance and was lacking in the presentations was where were we going to get the money from.”

Even Haney hesitated in her support, saying, “I didn’t think the cash piece, the cash investment piece should be part of it, and I thought, ‘Well, okay, I’ll support this, and then we’ll fix it later by separating out the cash fund investment and leaving the land sales piece.’”

Mayor Ward’s decision was formally announced at the October 26 reconvened assembly meeting.

Sponsor Aaron Lojewski moved to override the mayor’s veto, and Haney seconded.

However, the override, needing six out of nine yes votes to pass, failed with five yes votes and three no’s, along the same lines as the original ordinance.

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