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Dillingham moves on annexation again

August 29th, 2014 | By Dave Bendinger Print this article   Email this article  

At its August meeting, the Dillingham city council voted to move forward with a draft petition to annex the waters of the Nushagak commercial fishing district. The vote was not unanimous; councilman Tracy Hightower cast the lone dissenting vote.

The 194-page draft petition, which will likely be filed with the Local Boundary Commission, looks very similar to the petition drawn up in 2010. The boundaries for annexation are the same. The proposed tax rate of 2.5 percent has not changed. And already a few "Ax the Tax" signs have popped up around town.

It's annexation, round 2, at least.

"This is an old issue, one that many around here have been dealing with for decades," said Dillingham Mayor Alice Ruby.

Dillingham voters did narrowly adopt the annexation in the spring of 2012, and the 2.5 percent fish tax was collected that summer and the following fishing season in 2013 as well. But the annexation was struck down by Dillingham Superior Court Judge Pat Douglass earlier this year, who ruled in Native Village of Ekuk versus Local Boundary Commission that the local action method used was inappropriate. According to Douglass, that option had denied residents of other villages along Nushagak District waters adequate opportunity to participate in hearings, and those residents could not take part in the April 2012 adoption vote. With her ruling, the annexation was overturned, and the fish tax was not collected during the 2014 fishing season.

Douglass remanded that the Local Boundary Commission process the annexation petition under the legislative review method.

"Which method we moved forward with back in 2010 is something we struggled with for a while," said Ruby. "In the end, the city council felt strongly that the local action method with a city election gave us the maximum public input, and so that's what we did."

The city did not agree with the judge's decision, and mulled whether or not to appeal. In the end, Ruby said the council felt it was more prudent to advance under legislative review rather than spend additional, costly, time in court.

If the city does petition for annexation under legislative review, there will be no vote and few public hearings. If the petition is presented to the Legislature within the first 10 days of a session, lawmakers must vote with a majority in both houses to disapprove of the petition, otherwise it will become effective.

Critics call the legislative review method a "forced annexation" because it's essentially a slam dunk.

"That could be true," said Ruby, "but again there other factors, like new bodies in the Local Boundary Commission. The bottom line is, the city wants to be sincere about this and about taking public input. We've scheduled one meeting in Dillingham, and we've sent letters to all of our neighbors and offered to hold public meetings in those communities, too."

Revenues needed, city says

In fiscal year 2012, which ended June 30, the city collected $79,523 from the fish tax. In fiscal year 2013, which ran from July 1, 2012 to June 30, 2013, the city collected $848,910. From July 1, 2013, through the end of last year's fishing season, the city collected $400,630 in fish tax for fiscal year 2014, but did not collect any tax this past summer following Judge Douglass' ruling. In total, the city collected over $1.3 million from the fish tax, and estimates it left an additional $800,000 uncollected after the annexation was overturned.

The city is now drawing from a savings account to cover expenses not covered under revenues collected through other taxes, such as on property, sales, and alcohol. At the last council meeting, the city approved a small purchase that put the current deficit at just about $200,000.

The council has so far left the two separate funds established with the fish tax alone, or used them as the city says they were intended to be used.

The Regional Fish Infrastructure Fund has a balance of $66,451, after replacing a boat for use by the city harbor and purchasing some oil spill response materials. The Borough Fund, which is to be used to explore or pay for the possible formation of a borough, has a balance of $36,871. The two accounts were funded through a portion of the collected fish tax, at 5 percent and 3 percent respectively.

Ruby says the city is more cautious with its finances than popular perception sometimes holds.

"First, we always balance our budget. The city also projects what it is going to collect, and when we fail to collect enough revenue to cover our expenses, it comes from our fund balance, which is sort of our rainy day savings," she said.

Borrowing from savings to pay for current expenses is not a practice the city prefers or intends to maintain, and some cuts, hiring freezes, or hikes to other tax rates will likely be discussed alongside the current effort to reestablish the fish tax.

"We will continue to move ahead with annexation, and I imagine it will get approved, but we're not going to put all of our eggs in one basket, especially that this annexation will happen by this next legislative session," said Ruby.

As to whether the city is or will make cuts to the budget or tax increases to get the public's attention to the shortfalls, such as has been rumored with the proposed cutbacks to the DMV office, Ruby says is nonsense.

"Nothing, nothing would be done as a demonstration or as retribution. We are planning our budget right now for the next fiscal year that we will not be collecting the fish tax. If people want to know what this will look like, they are absolutely welcome at our Finance and Budget Committee meetings," she said.

The Nushagak District is now, again, the only commercial fishing district in Bristol Bay that does not carry a tax on the sale of raw fish collected by a local municipality. Ruby and other city officials believe that is a mistake. They say that the city, which provides the most regional services year-round and especially during the fishing season, should collect the tax and use it to pay for those services.

"The fish tax did what we hoped it would do," she said. "It generated revenue without cutting any services. We made some improvements that benefited the fleet, the community, and the region. It was easy to collect, and it did not have a tremendous impact or burden locally, especially on those with low income. Most of those who paid the tax were fishermen who don't live in Bristol Bay. If this isn't a fair tax, what is?"

Public input

The city council has thus far adopted a draft petition, the finalized version of which it intends to eventually submit to the Local Boundary Commission. Before doing so, the council will hear from the public, which has long been split on the issue of annexation and the fish tax for a variety of reasons.

That the public will not get the opportunity to vote for final approval makes input now all the more important, says Ruby.

"The petition has been updated some, and we hope people read it. The meetings we've had in the past were very useful, and I think we got good feedback, especially on which city services were appreciated and which are not. I hope the public is ready to participate in this process again," she said.

The first public meeting concerning the draft petition is scheduled for 6 p.m. on Sept. 24 at City Hall. All of the documents concerning the annexation are available at the home page of the city's Web site.


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