January signals the beginning of the municipal budget cycle. The Sitka Assembly meets more often this time of year, reviewing resource proposals for the general fund, considering where to set rates for the city’s enterprise funds, and deciding how much funding to direct toward local schools.
The process typically wraps up in May when the assembly passes its final budgets. There’s always some uncertainty in the process – unanticipated expenses always come up – and there’s no way to know exactly how much money the city will bring in in sales tax revenue. But this year there’s another unknown: the assembly is worried about the financial impact of a possible ballot initiative to limit cruise tourism.
When the Sitka Assembly met on January 9 (1-9-25) for its first in a series of annual budget meetings, it reviewed new resource proposals from city staff– these are new budget requests for Fiscal Year 26. The list ranged from larger, long term project budgets, like repaving Katlian and Lincoln Streets, to smaller one time purchases, like a new mower for the city’s grounds maintenance crew.
The city’s budget has grown over the last few years, with over $150 million dollars worth of grant funding, much of it directed toward big infrastructure projects, like the airport expansion. It’s established a new parks and recreation department and new positions like a sustainability coordinator, and it’s taken over the management of the Blatchley Middle School swimming pool.
Some of the growth has been attributed to the increase in cruise tourism and inflation, which has boosted the city’s sales tax revenue. But assembly member Kevin Mosher worried that a citizen initiative seeking to limit cruise tourism in Sitka is casting some uncertainty about where the city’s bottom line could stand next spring.
“I’ve just been wondering, I’ve been pondering, how we’re going to plan a budget, when decision made by the people of Sitka could have adverse effects on our budget,” Mosher said. Are we going to talk about that, or are we going to plan for if it passes? Are we going to plan for if it fails? Or do we have ability to do it both ways?”
Finance Director Melissa Haley said she was already budgeting more conservatively this year, as sales tax revenue has been leveling out over the last year. And she told Mosher that there would be challenges to figuring out how much of a hit cutting cruise visitation by around half would be, but she’s working on it.
“I think you all know I prefer a conservative budget. I think this year, for me, a conservative budget is a bit more scary than it’s been in recent years,” Haley said. “It’s really hard to know what that impact would have, kind of, in my preliminary numbers, and…I’m still waiting for more sales tax from the last quarter to come in to really, kind of, help develop those. But you know, at least going back to 2022…it’s a pretty significant drop in in revenue.”
Organizers of the petition have a couple months to collect just over 600 signatures. If they’re successful, the city has 90 days to hold a special election. Then the rules would, in theory, be implemented for the 2026 cruise season, which means the city’s revenue stream could take a hit in the last quarter of FY26.
Assembly member Tim Pike said all they could do was plan with the revenue projections they had.
“Nothing has happened yet. So build your budget as if from where we are today, and you know, we will cross those bridges if and when we ever even get to them,” Pike said. “We don’t know what our revenue is going to be. So let’s just plan it as we usually do. We do have good reserves, and you know, we can weather a brief period, and we can make adjustments as we go.”
But Chris Ystad felt the assembly should have an alternate plan in place if the initiative passed, and expected he would cut some of the resource proposals during the budget process to give the assembly more wiggle room in its budget.
“We’ve done a lot of spending here the last couple years, taking on maintenance, taken on the pool, starting the parks and rec program. I don’t want to lose those, and I would like to have a reserve buffer in place so that if we do see some dramatic revenue decreases, that we can keep those programs going and try to figure out how we’re going to keep them going into the future with a potential decrease in revenue,” Ystad said. “So that’s kind of my plan. I guess as we move forward, you know, any cuts I may make, it’s nothing personal. It is strictly, I’m wanting to hold on.”
During public comment, Klaudia Lecesse, one of the petition organizers, challenged the idea that cutting cruise tourism would have a dramatic impact on the city’s bottom line, and argued that a diverse economy was more important.
“I think it would be helpful for us all to realize that there’s a lot of value in independent travelers, and those folks who bring in money by virtue of using hotels and bed and breakfasts and car rentals and things like that,” Lecesse said. “I, as a individual, am very supportive of cruise tourism, and I think that we have a lot to gain by having them continue, just not at the levels that we have to close our streets and have bathrooms downtown.”
The assembly listened to the list of resource proposals but didn’t cut or make changes to any of them. That could change once the assembly reviews the first draft of the general fund budget in its entirety.
You can view the full list of Fiscal Year 26 resource proposals here. The assembly will hold a joint work session with the Sitka School Board Thursday (1-16-25) to review the school district budget and discuss the city’s contribution.
