City spending for FY2019. FY2020 budget numbers are still preliminary. The Sitka Assembly will review the first draft of the budget in February. (Photo/CBS)

At the very beginning of the Sitka’s budget process for next year, the numbers are not quite in focus.

Downloadable Audio

During its first budget work session of the year Thursday evening (1-10-19), the Sitka Assembly listened as the city’s chief financial officer, Jay Sweeney described the list of unknowns at the state and federal level — and how they could drastically change the final budget.

“The major unknowns are so impactful on the budget that if every one of the major unknowns came in to our advantage, we got everything we ever asked for, then we will be in a position to potentially make some impact on the deferred maintenance,” he said. But he cautioned that the opposite outcome was also possible.

Those unknowns include: the federal Secure Rural Schools program and state school bond debt reimbursement.

Another unknown: How much will it really cost to shut down the hospital?

“There will be wind down costs to winding down the business at the hospital, which will be, as there will be no source of revenue coming into the hospital any longer, a budgeted outlay of the municipality, until such time as there are no remaining expenses to wind down the hospital left,” Sweeney said.

And some of the unknowns include revenue. Sweeney said the city is still working to determine how much money was collected from raising the taxable transaction limit to $12,000, while separating that amount from the brief increase the city saw during the quarter when seniors were paying sales tax, before Sitkans voted in October to reinstate the senior sales tax exemption.

But even with this uncertainty, Sweeney believes the city will struggle to make ends meet.  The three key areas of the municipal budget — general fund services, investment in infrastructure, and supporting the school district — could all fall short in the next budget

“There is not enough money with the current identified revenues to do all three, and that’s really clear,” Sweeney said. “Something will have to give somewhere unless there is an identification of additional revenues.”

The assembly will hold its second budget work session on January 24 at Harrigan Centennial Hall to review the city’s Enterprise Funds, including Harbors, the Electric Department, Water, and the Gary Paxton Industrial Park.