Sitka Community Hospital will continue regular operation through the month of July, following a shift in the sale finalization date. (KCAW File Photo)

After the sale of Sitka Community Hospital to SEARHC was pushed back a month, the Sitka Assembly had to reshuffle its finances at its regular meeting on Tuesday night: Approving a budget for Sitka Community Hospital that wasn’t anticipated, and approving more money for consulting and legal fees associated with the hospital sale.

Originally, the hospital sale was to be finalized on June 30. Most of the services Sitka Community provides would move to SEARHC along with employees on July 1. But as the city and SEARHC  were still sorting outstanding liabilities they missed a key regulatory deadline — pushing the transition back to August 1. That meant Sitka Community has to budget for an additional month of operations. CEO Rob Allen said they were still shoring up some of the details surrounding the new date.

“The plan is the emergency room will be open all the way til the end,” he said. “It won’t be July 31, it’ll be two days before that that it will close down. We’re trying to get those dates firmed up by the end of this week- because we want to start getting that information out to the community to patients, to let everyone know what the plan is.”

The budget for the hospital passed 7-0 on first reading, but there was further assembly deliberation over paying still more money to the consultants who have been helping the city navigate the hospital sale process.

City attorney Brian Hanson said that in the grand scheme of things, paying $422,000 in consulting and legal fees may save the city money in the long run.

“Just because you can’t find the dead body doesn’t mean somebody didn’t commit the murder,” Hanson said. “Our potential liability would skyrocket if we were to have a whistle blower have uncovered this as opposed to us finding it and self reporting on it.”

But some assembly members took issue with the price tag. Valorie Nelson wanted to know what would happen if the assembly decided against keeping the consultants on. Hanson thought that would present risks to the city..

“So just as a point of clarification it wouldn’t just be the five-hundred dollar poison pill it would be more than that?” she asked.

“I don’t know what you mean,” Hanson said.

“Well there was a breakaway clause that if the city didn’t follow through with this, we would have to pay $500,000 to SEARHC. If SEARHC backed out or didn’t perform, then SEARHC would have to pay us, the 500,000.”

“I would suggest if we didn’t have consultants and our attorneys to help take us to the end on this and we weren’t able to complete the transaction, there’s a potential for being liable for the “poison pill” like you call it,” Hanson said.

Ultimately the motion to pay an additional 422,000 in consulting and legal fees passed 5-2 on first reading with assembly members Richard Wein and Valorie Nelson opposed.

And after a months-long budget process, the assembly passed the final municipal budget for next year with little discussion.

It approved budgets for the general fund, electric, water, harbors and airport terminal funds on votes of 5-2 with assembly members Aaron Bean and Richard Wein opposed.  

And the body approved the wastewater and solid waste budgets — the only funds that include rate increases for next year —  on votes of 4-3 with Bean, Wein and Valorie Nelson opposed.

Assembly member Steven Eisenbeisz said he thought the rate increase for solid waste was necessary for now, but as a community Sitkans should start working on how to reduce the cost of shipping trash off the island to avoid further rate hikes in the future.

“The shipping rates have gone up, fuel surcharges in shipping have gone up, and the amount of trash that we’re actually throwing away has gone up as well. So while we have discussed multiple ways we can reduce the cost of this fund, for instance not throwing away your pallets, as that is a very large expenditure to ship out of here every year,” Eisenbeisz said. “I don’t believe any of these changes can be instituted overnight.”

In other business, the assembly rejected a proposal to change the way revenues from city property sales are divided. It unanimously reappointed Tyler Green to a term on the Ports and Harbors Commission, Morgan Doubleday to a three year term on the Animal Hearing Board, and appointed Rich Krupa to a three year term on the Parks and Rec Committee.

The assembly heard a presentation about a construction project to pave and update Lincoln Street — scheduled to begin this fall.

And on first reading, the group voted to shift the seasonal electrical rate increase by one month. Currently electric rates rise from 12 to 19 cents a kilowatt-hour in March, and then go down again in October. If passed on second reading, the rate would not increase until April.