From murder charges, to a wrongful conviction suit, to a settlement – the 30-year Fairbanks Four case wrapped up in March after the city agreed to pay Marvin Roberts a sum that equates to almost a quarter of its annual operating budget.
Now, the Fairbanks City Council has to decide where that money is coming from – and when.
Fairbanks Mayor David Pruhs and his administration proposed their idea to raise the cash at a Tuesday work session. That’s when the council got a first look at the draft resolution to establish this year’s property tax rate for the City of Fairbanks.
Typed on the line where digits representing the mill levy will appear in the document’s final version, there was instead a bolded and highlighted series of Xs – a placeholder.
“Normally, you would see what that amount of levy is, but because of the lawsuit, I thought we would want to talk about what we would want to do for the levy for 2025,” said Margarita Bell, the city’s chief financial officer.
Though Bell presented the administration’s preferred plan Tuesday, which would see property tax rates go up about one mill for this year, she said she left the placeholder in the draft resolution for the sake of discussion.
“I wanted to go through it first so you could see what it would look like if we did not have a lawsuit, and then I wanted to talk about my recommendation considering the lawsuit,” she said.
The council needs to take some action to cover the legal agreement with Roberts, which has the city on the hook for most of the $11.5 million sum.
That settlement marked the end of his legal battle against the city and four of its former police officers. He was the final member of the Fairbanks Four to drop his portion of the federal civil rights lawsuit. Filed in 2017, it claimed officers had fabricated evidence to convict the four Indigenous men for a 1995 murder they didn’t commit. In 2023, the other three men – George Frese, Kevin Pease and Eugene Vent – settled with the city’s insurer, the Alaska Municipal League Joint Insurance Association (AMLJIA), for about $1.6 million apiece.
Bell presented a proposal Tuesday to pay for the sum in the Roberts settlement, and it rests on a few key numbers and dates.
First, the city is not responsible for the entire $11.5 million. The AMLJIA agreed to cut a $2 million check to help pay for the Roberts settlement, bringing the city’s bill down to $9.5 million.
The agreement between the city and the AMLJIA, obtained by KUAC through a public records request, says the AMLJIA had a reinsurance contract and were reimbursed $6 million for the two settlements by the General Reinsurance Corporation (GRC). The agreement says until the Roberts settlement, the city, their insurer and the reinsurance company had been disputing whether the city owed the AMLJIA or GRC restitution for the settlement reached with Frese, Vent and Pease.
The $9.5 million ultimately billed to the city doesn’t have to be paid all at once. According to the settlement with Roberts, the city is allowed to pay it in three separate installments: $5 million up front, $3.25 million this October, and the final $3.25 million by October 2026.
Bell said Tuesday the $2 million from their insurer had gone toward the first of those payments.
But $9.5 million still poses significant financial questions in a municipality where the current annual operating budget totaled about $47 million, and the council has two main levers for finding the money: increasing property tax rates, or spending from savings.
Bell said that, under the administration’s proposal, the city would split up budgeting for the expense between this fiscal year and the next two.
The idea would be to thin the cost to roughly $3 million for each of the three budgets and raise the mill rate accordingly each year, she said, though that intent wouldn’t bind future city councils.
The current council can only set a mill rate for this year. According to Bell, the plan would bump the 2025 rate from just over 5.8 to just under 6.8. A single mill is equal to $100 for every $100,000 of a property’s assessed value.
The body wasn’t tasked with reaching final decisions Tuesday, so council members generally refrained from expressing concrete views about the plan. But they still opined.
And in the estimation of Councilmember Valerie Therrien, public sentiment might help balance out the tax hike.
“I’m not sure that the community is going to be so mad at us for the Fairbanks Four receiving some money because I think that the community supported their claims,” she said.
Therrien’s comment came in response to members who’d voiced some doubt about upping property taxes as a sole means of paying for the settlement.
Councilmember John Ringstad was one of them. He said he’s not sure about the approach of exclusively using an increased mill rate, noting the savings draw option.
“I’m not sure that that, to me, sells very well. I think just in terms of fairness we ought to be willing to pony up something,” he said.
There isn’t a ton of wiggle room in city savings; the fund balance of the city’s general fund is hovering around $5 million clear of the minimum amount the city must keep in it. And that figure doesn’t take into account any increase to expenses that could come from a new contract currently under negotiation with the firefighters’ union.
The administration also told the council Tuesday that they’d found no record of the city using savings to cover a settlement before. And City Attorney Tom Chard said, whatever the council decides, it could set a standard.
“So just pointing that out. I don’t think that it’s ever been done. But that doesn’t mean that it can’t be done now,” he said.
The resolution establishing the mill levy will appear on the agenda June 9 for a final vote at the regular city council meeting.