While it’s far from a spending spree, Sitka has taken advantage of a rebound in sales taxes to fund schools to the cap, take over management of the Blatchley Pool and provide new programs and services like Parks and Recreation. A wave of federal funding for infrastructure helped get big ticket items like the city’s airport expansion project and a new marine haulout off the ground.
But the assembly is now going to have to pump the brakes. City Finance Director Melissa Haley published the first draft of the city’s general fund budget for FY26 in February, with a $743,000 deficit. When the Sitka Assembly met on February 27, Haley noted concerns about the local and national economy, as well as a possible ballot initiative to cap tourism and a federal funding freeze, that could add to that number down the line.
“We’ve already had a lovely morning where we come into work and hear that all of our federal funding was frozen,” Haley said. “So that’s pretty scary, and if that were to continue, that would certainly be a huge challenge for the city.”
She said if the ballot initiative to cap cruise tourism is approved by voters and goes into effect in the spring of 2026, the deficit could grow by $1.8 million. A loss of federal funding would be another $1.2 million hit to the general fund. And the city is anticipating increased costs in other areas, like an 18% hike in health insurance premiums.
Haley said city leadership had preemptively reached out to department heads to identify possible cuts. Assembly member Thor Christianson said he preferred to wait on those recommendations before taking action.
“We now know what we have to work with, the staff knows what they have to work with. I don’t think I’m ready to make any real decisions tonight,” Christianson said. “Now it’s time to think about it.”
“I’m almost shocked. We are the assembly. We are here to make hard decisions,” assembly member JJ Carlson said. “We’ve had this for over a month, and we’re going to sit and wait for someone else to do the work?”
Ultimately, the assembly did agree on a few areas to trim. Among the cuts, the group agreed, on a 4-1 vote, to cut a city hall vehicle and police cruiser replacement from the budget, saving around $100,000. Sitka’s fire chief said the city could postpone the replacement of three defibrillator and vital monitoring machines – a savings of $180,000. The assembly unanimously voted to cut the commercial rec land use plan budget from $50,000 to $15,000, and added some smaller ticket items, like language programs, back into the budget for the library.
The cuts amounted to less than half of the projected deficit, so the group turned to a relatively new city program, Parks and Recreation. Mayor Steven Eisenbeisz said while he loved the program, in just a couple of years its expenses had already outgrown its revenue.
“I also think that this program, and gratefully so on your part, has grown rapidly within the time frame that it’s that it’s started, and at this point, just perhaps a little too rapidly for for my budgetary tastes, at this point, when you look at it, it’s, you know, within a very short amount of time, we’re almost up to the entire budget of the library.”
A large part of the department’s budget is operating the Blatchley Swimming Pool, and the pool is a big revenue driver. Parks and Rec Director Kevin Knox, beyond pool management, finding $100,000 to trim from his budget would be a big hit.
“As you can see, most of it is for staffing, from the permanent staff positions to the temp wages, but then also those contracted services. Those in general, are what we go out to the community for, looking for experts or instructors or other things like that, other people like that, to provide our front facing and our program implementation. So there’s not a lot in that budget there that we would really be able to reduce without reducing services.”
The assembly asked Knox to look at how a cut in the neighborhood of $100K would impact Parks and Rec services but held off on a vote for the time being. Mayor Eisenbeisz hoped that by the next budget meeting they could get closer to a balanced budget with the help of staff.
“I don’t want a single department to take $180,000 hit like the fire department did,” Eisenbeisz said. “So hopefully everybody can come forward [to] John [Leach] with just a little bit, and we’ll get there.”
The assembly still has time to make changes to the general fund budget before it votes on the final product. Later this month it will take a hard look at its enterprise funds – that pay for services like harbors and utilities – as the budget process moves into spring.
