The budgeting process for fiscal year 2025 is underway, and when the Sitka Assembly met on February 29, it reviewed the city’s enterprise funds and proposed rate increases. This year, city staff recommended increasing utility rates by 4% for water, 7.5% for waste water, 4% for solid waste and 4% for harbors.
In a rare move, the city’s electric fund won’t see a utility rate increase this year for usage, due to a $2 million dollar grant the city received. However, the flat base rate for some customers’ electric bills will increase for the first time since 2016, based on the results of a cost of service study the city commissioned. Municipal Administrator John Leach said it’s more expensive to service some customers, like those on remote islands, and the rates aren’t offsetting those costs.
“When we talk about the remote islands service, just in this past year we had to make a pretty substantial repair that was getting close to six figures to make that repair,” Leach said. “Looking at that users account, we took their lifetime payment into the utility rates, and even their lifetime payments over X number of years, [and it] came to about $40,000 But we still have to spend close to, if not over, $100,000 for repairs to that to that one property.”
The assembly was prepared to go with staff recommendations for rate increases on all of the enterprise funds except wastewater. The department is installing an expensive disinfection system to meet a new federal mandate from the EPA, which is one reason its debt load has increased. Mayor Steven Eisenbeisz said the rate increase for wastewater should be at 8.25%, a little higher than city staff were recommending.
“When I look at this slide, there’s a lot of indicators of a fund that is very much not healthy, and one small incident away from being completely insolvent, having to borrow from the general fund,” he said. “And I just I don’t feel comfortable going forward with that.”
Next year’s enterprise budgets also included two new full time positions — a harbor maintenance position and someone to manage the new secondary filtration plant at Blue Lake. Assembly member Kevin Mosher said he felt the positions were needed and should be funded. But given that nearly 30 city positions are currently vacant, he anticipated some trouble attracting applicants.
“The one concern, too, is going to be filling them. I think that might even be a greater concern than then funding,” he said. “But given that there’s going to be some people retiring [in the] next couple years too, it’d be good to have some people that have some time to be trained.”
Other than increasing the wastewater rate, the assembly didn’t push back on most staff recommendations for the enterprise funds. But things may be different when the assembly reviews next year’s general fund budget. With lots of new line items, finance director Melissa Haley told the assembly it would likely be a deficit budget. Mayor Eisenbeisz said he wanted to see them land on a $1 million surplus, rather than a deficit. That would mean saying no to some requests from staff in the coming weeks.
“My first two thirds of my career on this assembly, we cut every single year, and we were finding ways to do more with less,” he said. “But right now we’re seeing years of surplus, we’re seeing years of lots. And we can see that in a lot of the requests that are coming through departments,” he said.”
“I’m not downplaying any of their requests, but [they] are coming forward asking for a lot, because this budget is here. In my opinion, when we have a lot right now, when we have good years, we need to squirrel some of that away. We need to save some of that for the years that are not good.”
The assembly’s next budget meeting is on April 4 when they’ll discuss the draft general fund budget.
