The Fairbanks City Council voted Monday night not to use a property tax increase to recoup the first $3 million paid in a settlement to Marvin Roberts over a wrongful conviction lawsuit.
Instead, the city will swallow the costs for 2025 rather than pass it on to property owners.
The city settled with Roberts in March for $11.5 million, with $2 million paid by the city’s insurance carrier. The city will pay the remaining $9.5 million in installments over the next few years. The city has already paid the initial $3 million from its fund balance; it will pay another $3.25 million this October and the remaining $3.25 million in October 2026.
Councilmember Jerry Cleworth successfully motioned to have the city bear the initial $3 million cost for now, as it can afford to do so.
“We have the luxury of doing this now,” Cleworth said. “We will not in year two or three.”
The motion was made after Councilmember John Ringstad proposed drawing $1 million from savings to reduce the burden on taxpayers. Ringstad called the motion fair.
“We are where we are. We’ve got to pay the bills,” Ringstad said. “That’s what we’re doing, paying the bills. We’re not arguing the case.”
Roberts is the final member of the Fairbanks Four to settle with the city over a wrongful conviction in the 1997 assault and death of teenager John Hartman. Roberts, along with Eugene Vent, Kevin Pease, and George Frese, served nearly 18 years before their conviction was vacated in 2015. They sued the city in 2017, leading to a lengthy legal battle.
The city settled with Pease, Frese and Vent in 2023 for $1.59 million each, which the city’s insurance company covered.
The city administration initially proposed recouping the initial $3 million by increasing the property tax by 0.922 mills, which would result in a property tax of $675.50 per $100,000 of assessed value.
The council’s decision to absorb the $3 million means the mill levy will be set at 5.833 mills, or about $583.30 per $100,000, which is lower than the 2024 mill rate of 5.914 mills.
The rationale was that recouping this year would reduce the pressure on property tax owners next year, when the city would have to apply a mill levy increase to help pay for the settlement.
However, placing the whole burden on taxpayers this year caused heartburn among some councilmembers, including Ringstad and Lonny Marney. Ringstad said any mill rate increase will impact the largest property owners who own multiple properties, while Marney had concerns about impacts to businesses.
“There are places like the Bentley Mall, which has a lot of space open, wouldn’t be able to handle the increase,” Marney said. “There are a lot of businesses that are barely making it by, and I don’t want to see more vacant stores.”
Cleworth agreed, noting if there are concerns about businesses and property owners, “that first 3 million should be on us and let the others come with tax increases.”
He added that the first $3 million has already been paid out and “is gone.”
Councilmember Valerie Therrien, however, disagreed with the solution, citing a challenging fiscal year ahead. The city is in arbitration with the Fairbanks Firefighters Union over a contract and would need to draw on its savings to cover any final resolution and there are potential unforeseen costs.
“I think we are looking at having a problem being able to balance our budget and have enough money to pay for that arbitration,” Therrien said. “I am really concerned about dropping the mill rate and not capturing this [$3 million].”
The council approved Cleworth’s amendment in a 4-2 vote, with Cleworth, Marney, Ringstad and Sue Sprinkle voting yes and Therrien and Crystal Tidwell voting no. The council approved the overall mill levy in a 4-2 vote along the same lines.
While the city will absorb the $3 million this year, it will need to find a way to recoup the $3.25 million paid this October and next October. Those amounts will likely be included in the 2026 and 2027 mill levies.
However, Mayor David Pruhs said the City Council cannot set future year mill levies. Mill levies set for 2025 are collected in September and November.
“We cannot affect the 2026 budget until we go into 2026,” Pruhs said.
Pruhs added the only reason the City Council was discussing the issue was that the city lacked insurance at the time the Fairbanks Four were arrested in 1997 and later convicted.
“A majority of taxpayers will be paying for something that happened 25, 26 years ago,” Pruhs said. “If they (the city) had had insurance at the time, this would have been a lot easier for us. Let that be a lesson. … There is no easy answer, no right or wrong answer. We should be good with this for something we did not cause but was on us to rectify.”
The council approved Cleworth’s amendment in a 4-2 vote, with Cleworth, Marney, Ringstad and Sue Sprinkle voting yes and Therrien and Crystal Tidwell voting no. The council approved the overall mill levy in a 4-2 vote along the same lines.
