Throughout the tenure of the Citizens’ Task Force, city staff have sat in the audience to answer questions and even offer solutions. The relationship has always been a collaborative one.
But at their meeting on Monday (02-29-16), the sobering uncertainties of the FY17 budget dominated the conversation. And it was there that the task force began to push back against city staff on what Sitka’s financial strategy should be.
The size of Sitka’s budget deficit is completely unknown. Chief Administrative Officer Jay Sweeney’s preliminary estimate is $700,000, but the number changes based on variables beyond Sitka’s control, like state and federal funding.
At Monday’s meeting (02-29-16), Sweeney laid these unknowns before the feet of the Task Force. “What are we going to do about health insurance [coverage for city employees]? We’re faced with a 20 percent premium increase. Are we going to switch carriers? Are we going to go with self-funding? That decision hasn’t been made yet. We have union negotiations with all three collective bargaining unions. We may have a 0% increase or a 3% increase. We don’t know how that is going to play out” he said.
Funding that Sitka used to count on may not be in play next year. A proposal to change the shared fisheries tax puts $2 million on the line. Then there’s a possible $300,000 cut for community jails, and $760,000 if federal funding for Secure Rural Schools is not secured.
With all these moving targets, Sweeney said he’s in the dark. He said, “I’ve told our staff internally, ‘I don’t know if I’m even going to have solid numbers by June or July.’ We may be in a position where we’re passing a budget based on best we know.”
A pause fell over the Citizens’ Task Force. Member Hugh Bevan joked, “I feel like I’m wasting my time.” Rob Allen responded in saying, “We’re just going to do the best we can with our estimates, knowing things could change.”
Lawrence SpottedBird commented, that, with so many balls up in the air, it may be even more imperative to consider these choices. “Are we still going to operate a $26 million budget, in spite of what the external factors call for, or are we going to rely on the citizens to foot that bill? To me, that’s even more of a reason to be conservative. To tighten our belt and hope for the best, but be ready for the worst.”
If Citizens’ Task Force proposes cutting the city’s budget, which they have not done so far, it would impact either city staffing or operations.
Sweeney asked the task force to consider what a reduction of 20% to city operations (roughly $1 million) would do to Sitka. “Examples: Would you want to go to an all-volunteer fire department? Have one policeman on the road at any one point in time? Library open three days a week? Those are types of decisions you move to when you have that level of cut and that’s what a smaller cut would look like,” he said.
SpottedBird responded that he felt the task force was getting push back from city staff whenever the conversation turned to cuts. Public Works Director Michael Harmon, sitting in as acting Administrator for Mark Gorman, said that wasn’t so and that he was meeting with Gorman next week to discuss the possibility of cuts.
“Don’t take when we’re trying to explain – so we’re educated in what the cuts mean and what the impacts are, I think that’s important – please don’t take that as resistance. We know that needs to be a piece of this recipe,” Harmon said.
Another sobering conclusion: Sitka’s budget deficit will likely not be closed this year. By the Task Force’s estimate, it will take three years to balance revenue against spending and for many of their policy ideas to take effect.
Take, for example, raising property taxes. Rates are capped at six mils. Each additional mil would raise $1 million. But as Assessor Wendy Lawrence pointed out, time is running out to make that kind of change. “Mil rates are typically set by July 1st. We have time to change the mil rate if we chose but it’s a problematic situation because we haven’t had public input,” she said.
To help the Task Force project into the future, Gorman drafted a 3-year “Grand Bargain” budget, with columns for 2017, 2018 and 2019. But one line item (B13) raised eyebrows. In his budget, Gorman proposed subsidizing the electric fund to keep electric rates from rising. He does so by pulling $1 million from General Fund reserves.That’s because there’s just not enough money in the General Fund to make this kind of change.
A handful of Task Force members took issue with tapping Sitka’s reserves in any way to close deficits. Vice-Chair Max Rule said it countered the narrative of the group. He said, “I’m in favor of coming up with recommendations that don’t have any regard to any subsidy out of reserves and leave that discretion up to the Assembly to decide.”
Tristan Guevin, who sits on the Assembly and serves as a liaison to the Task Force, agreed. He said, “At some point, it’s our time to pick that up and make some hard decisions.” The Task Force is expected to deliver its report to the Assembly in mid-April.