Next year’s city budget is a done deal. The Sitka Assembly approved a plan that includes a $27 million general fund.
The original budget submitted by city staff included two layoffs. Those were avoided when Assembly members added the funding back in at earlier meetings. But cuts still exist to several departments.
The list of cuts includes a $500,000 computer network in city hall, a $240,000 for two vacant police positions, and $17,000 for street repairs.
Assembly member Phyllis Hackett protested cuts to city funding toward nonprofit organizations. She said she’ll probably bring the matter up at a future meeting.
Hackett and Pete Esquiro were the only votes against the budget. Esquiro said he voted “no” in part because he objected to the Assembly restoring funding that had been cut in budget’s first draft.
The 2013 budget takes effect July 1. It is balanced, but the city is not out of the financial woods. Assembly members continue to look for ways to raise more money.
Still on the Assembly table is a measure to raise Sitka’s sales tax cap. Right now, sales taxes are only charged for the first $1,000 of a purchase. A measure advanced Tuesday night would change that to $1,500. That’s substantially lower than the amount originally proposed earlier this spring, but…
“We got beat on until we gave in,” said Assembly member Thor Christianson.
Christianson is talking about the public backlash against the original plan to raise the cap to $5,000. At earlier meetings, business owners said raising the cap would make it difficult to sell big-ticket items to cruise visitors. Charter operators said it would make businesses harder for them to conduct. Other cruise operators asked for a later effective date. They argued that making the hike effective in the middle of the summer, when the new fiscal year starts, would screw up existing reservations.
So, the Assembly made changes. The tax cap would be set at $1,500, and wouldn’t be effective until Oct. 1. The ordinance still needs another reading at the Assembly table before it’s finalized.
City Finance Director Jay Sweeney said with the October start date, the higher tax cap would be in place 9 months of its first year, and would raise about $500,000.
“And if you’re looking at a full year, you’re looking at roughly $900,000,” Sweeney said. “I would caution, though, that when you’re asking me these numbers there is no way to make anything but a speculative guess ahead of time. We’ve been consistent on that point.”
Figuring out how much money could be raised by a change in the tax cap would require knowing how consumers will behave. Will people replace their TVs this year, or buy valuable pieces of artwork from local galleries, or book tours with local guides?
“And so I would think you would have to attach a large margin of error to those estimates,” Sweeney said. “But I think that’s within the realm of possibility – the numbers I gave you.”
Mayor Cheryl Westover said she’d be careful about counting on the money in future budgets. As an example, she cited a $10 tax on fish boxes the city imposed.
“It was estimated it was going to bring in $800,000. It never came close,” she said. “So I would caution us to not be counting our chickens before they hatch.”
The city might not want to count its chickens, but it is trying to build up some nest eggs. One of those is a fund for repairs to municipal roads. The money would come from an increase in the city’s motor vehicle registration tax.
Under that proposal, Sitkans would pay a tax on their vehicles every other year beginning in 2014. For non-commercial vehicles, like the family car, that would be $200. Motorcycles and trailers are cheaper, and commercial vehicles are more expensive – about $400.
The money would go toward road maintenance and repairs, as well as related infrastructure like sidewalks and bike lanes.
The Assembly had hoped to discuss the idea at its meeting Tuesday, but it ran out of time. The item is expected to come up at the next regular meeting, on June 26.