The Sitka Assembly has directed city staff to cut $2 million dollars from their draft of the general fund budget, after staff presented them with a ‘worst case scenario’ budget built around major cuts to state funding.
City staff presented their budget to the assembly at a special meeting on Thursday (3/15/19). As state funding remains uncertain, City Administrator Keith Brady said the city’s general fund budget was drafted with Governor Mike Dunleavy’s proposed budget in mind, which could impact the city’s bottom line by nearly $6 million dollars.
“I guess you can call, a worse case scenario from the governor’s budget,” Brady said. “We wanted to show you what we have done, just in case a budget like his was passed.”
Chief Financial Officer Jay Sweeney said the team drafted a budget that maintained all services at their current level and left the city with a small surplus. But something had to give.
“However, it’s at the cost of increasing deferred maintenance across the board,” Sweeney said. “There’s insufficient funding provided for capital expenditures that we know need to be made.”
Sweeney said the FY2020 budget didn’t just defer current maintenance needs, it also didn’t take future maintenance into account, like major school renovations that he said were looming in the future.
Assembly member Kevin Mosher wondered how much revenue could be generated if the city moved to a 6 percent sales tax year round.
“I’m not all about increasing taxes, but you know we pay 5 percent in the winter and six percent in the summer,” Mosher said. “Would increasing the sales tax to 6 percent all year long, I don’t think that it’s a huge increase. I wouldn’t be comfortable with anything more than that, but maybe that could help out with the schools?” he asked.
“It would greatly help out,” Sweeney responded. “My estimate is somewhere around the range of $850,000 extra dollars per year.”
Assembly member Richard Wein advocated for peeling through the general fund budget line by line to see where money could be shifted around. But assembly member Aaron Bean, who joined the meeting via teleconference, preferred a 10 percent cut overall. And he said he knew the decision wouldn’t be popular.
“If you’d like to, like Dr. Wein perhaps do the page turner, and go through and question every director on everything that they’re doing. Sounds like a nightmare to me,” Bean said. “No, by saying ‘We’re gonna give you back your budget as proposed and you need to make 10 percent cuts. I wouldn’t imagine that we’re going to be greeted with a red carpet and a pat on the back downtown,” he said. “But I didn’t sign up for that.”
So Bean made a motion to suspend all capital projects, with the exception of the wastewater treatment plant, secondary water source, and marine street substation projects.
That motion was seconded by Mosher. Brady said the move would, in fact, equate to a ten percent cut to the general fund budget. But ultimately it was voted down 3-2, with Deputy Mayor Stephen Eisenbeisz, Richard Wein and Kevin Knox voting against. Then Bean made another motion, to cut 10 percent across the board, from general and enterprise funds. Deputy Mayor Stephen Eisenbeisz said while he wasn’t opposed to budget cuts, he thought they could approach it a different way.
“Give instruction to the administrator to find an additional 2 million dollars, 3 million dollars, whatever the assembly is comfortable with,” Eisenbeisz said, “as opposed to saying ‘this percentage of cuts will happen.”
Bean revoked his motion, and Wein made a motion directing staff to find $2 million to cut from the general fund budget. Assembly member Kevin Knox said he didn’t like that approach, and said the assembly should be looking at how the city generates revenue.
“I don’t believe that we should be cutting our budget any further,” he said. “You know a lot of people have said that additional taxes and fees are not the way to go. I totally feel that. I think maybe what we should be looking at is how we have our revenue generated in this city.”
That motion passed 4-1 with Knox voting against. Assembly members Valorie Nelson and Mayor Gary Paxton were not in attendance. Keith Brady said staff would do the will of the assembly, but it could mean a big impact on the services the city provides.
“It might include snowplowing. We’ll see, that’s a service,” Brady said. “We’ll do what the assembly directs, but it will come back with some kind of impact to the citizens.”
The assembly directed city staff to bring them a budget in two weeks that included the $2 million in cuts, before their April 4 budget meeting with the Sitka School Board.
