Sitka is still struggling to come up with funding for the School District and Sitka Community Hospital. (Rachel Waldholz/KCAW)

Sitka is still struggling to come up with funding for the School District and Sitka Community Hospital. (Rachel Waldholz/KCAW)

The Sitka Assembly passed a budget for the coming year on first reading last night (5-27-15). But that budget still has a million-dollar hole —  and the assembly postponed a measure that might have filled part of the gap.

The shortfall is significantly larger than expected even a week ago. Member Michelle Putz asked city administrator Mark Gorman for clarification.

Putz: I just wanted to check. Am I to understand that we are showing a $700,000-plus deficit in this budget? Or was that just my total misunderstanding?

Gorman: That’s correct. And it’s actually increased…we’re approaching more like a million-dollar deficit at this point in time.

That jump is the result of state budget cuts. Gorman said the Department of Corrections told the city this week that it plans to slash funding for Sitka’s jail by almost half. That’s a reduction of about $300,000 the city will have to absorb.

The rest of the gap comes from the city’s efforts to shore up the Sitka School District and Sitka Community Hospital.

The assembly has promised an additional million dollars to Sitka schools this year to avoid teacher layoffs. But so far, assembly members have only come up with about half that much. Earlier this month, the assembly raised the sales tax cap from $1500 to $3000. That change was set to go into effect on July 1, but local business owners — especially in the charter fishing fleet — protested that it didn’t give them enough time to plan. So last night the assembly voted to push back the change until October 1. That means the measure will bring in less revenue than expected this year.

Meanwhile, the city has also budgeted nearly a million dollars for Sitka Community Hospital, which is still recovering from a financial crisis. About a quarter of that funding was to come from a proposal to double tobacco taxes. But the assembly postponed that measure earlier this month.

And last night, the assembly postponed voting on another source of revenue: repealing the senior citizen sales tax exemption.

Currently, residents over age 65 do not have to pay the city sales tax. And assembly members heard forty-five minutes of passionate testimony in favor of keeping it that way.

“Please, senior citizens are pleading,” said resident Patricia Svedlack. “Stop raising everything. Have pity on the senior citizens!”

The assembly did advance one tax measure Wednesday night, voting to put a question on the October ballot asking voters to raise property taxes. But even if that measure passes, the money wouldn’t be available for about two years.

The final item on the agenda was a proposal to set up a citizen task force to make tax policy recommendations by the end of June. But assembly members decided that timeframe is unrealistic, and the city needs a longer process to revise its tax code.

And in the meantime, said member Michelle Putz, the city is facing an immediate deficit, and it’s time to bite the bullet.

“We need short term fixes,” she said. “And we’re just going to have to deal with it. We’re just going to have to deal with it ourselves…for now, we just have to come up with what we’re going to do in the short term, and realize that we’re probably going to do some things wrong, we’re definitely going to make people angry.”

“We’re going to do the best we can,” she said. “Do it, and then work with a larger group and larger community to try to do it better and comprehensively.”

You can find more coverage of the Sitka Assembly here.