After a process that spanned months, the Sitka Assembly set its final budget for next year. When the group met on Tuesday (5-25-21), it approved a general fund budget of just over $29 million dollars for fiscal year ‘22.
To say it was a challenging budget season would be an understatement. For months it was unclear whether Sitka would see cruise ship traffic this summer. City staff projected the loss of a 2021 cruise season would leave the city short by just over $6 million in sales tax revenue, so staff budgeted conservatively. With recent announcements that cruise ships could return to Sitka as early as July, the picture might be a little brighter, but the budget remains unchanged.
The budget $1.8 million deficit, but most of that will be covered by a $1.5 million budget surplus from last year, plus some money from the general fund reserves.
“I think, it’s my opinion that this is the best we can do,” said member Kevin Mosher. “I think this is a good budget, which is an estimate basically. I think it’s a pretty good document. It’s not perfect and we can make changes as necessary.”
The assembly also approved the enterprise fund budgets on final reading — those are electric, water, wastewater solid waste and harbors. Each enterprise fund budget includes rate increases. Electric rates will increase by 2.5 percent, water and wastewater will see a 2 percent bump, solid waste rates will increase by 4 and harbor rates and fees will see the steepest increase, at 5 percent.
Member Valorie Nelson, who voted against the budgets on first reading, said she would continue to vote no because she thought it would make Sitka less affordable, and she didn’t support big wage increases for electric department staff.
“It’s not going to be a solution for people that are struggling to keep their lights on,” she said.
Administrator John Leach said he was sensitive to the rate increases, and hoped that some recent efforts would help.
“We’ve got a Harbor Master Plan study coming up, we want to make sure the harbor rates are where they need to be and applied correctly. We’ve got a rate rate study that we’re going to undertake in the Electric Utility Department,” he said. “But I’d also like to point out that with the addition of a compliance officer I found we were bleeding revenues in a lot of places.”
The general and enterprise fund budgets both passed on 6-1 votes with member Nelson opposed.
Assembly seeking suggestions for $2.6 million windfall
Now that the city’s budget is finalized, the Assembly can begin considering what to do with two extra pots of cash.
The first is a $1 million dollar donation from Norwegian Cruise Line Holdings. The company is donating $10 million dollars to Alaska port communities affected by the pandemic, with “no strings attached.”
The city is also set to receive another wave of federal coronavirus relief funding from the American Rescue Plan Act– around $1.6 million dollars. Unlike the cruise money, the funds come with stipulations and must be spent within the next couple of years.
The two windfalls have generated a lot of public interest, and when the Assembly met on Tuesday (5-25-21) , it heard suggestions on how to spend the funds. Ideas varied widely from pouring the cruise money back into the permanent fund to spending it on equipment that monitors the air quality at the cruise ship dock.
The Assembly didn’t come to any decision on the funding, and member Crystal Duncan said she was glad they were taking their time.
“I’m glad we’re having these conversations and that we’re not rushing to make a decision,” she said. “Because I’m learning about the needs of this city and it’s through suggestions that are coming from folks, so this is a pretty crucial conversation that we’re having.”
Sitkans will get to weigh in again at the next regular assembly meeting on June 8, and city administrator John Leach said residents could email him and the assembly with their ideas for how to spend the funds.
In other business, the Sitka Assembly…
-Discussed a proposal from Shee Atiká Inc. and Adventure Sitka to lease 17 acres of city-owned property to build a tourist attraction. The assembly went into executive session for around an hour to discuss contract negotiating terms. When it returned, the Assembly voted to direct the city administrator to negotiate a lease based on terms discussed in executive session, on a 5-1 vote with Mayor Steven Eisenbeisz opposed. Read more about the proposal here.
–Unanimously approved a 50/50 matching grant application to the Office of Justice Programs – Bulletproof Vest Partnership.
–Set the millage rates for the fiscal year July 1, 2021 through June 30, 2022.
–Unanimously approved a liquor license renewal application for JL Totem, Inc. dba Totem Square Inn
–Unanimously approved the minutes of the May 11 Assembly meeting.
