There’s an unusual word being used in early budget discussions in Sitka — “surplus.” But that doesn’t mean that the city has money to burn. Belt-tightening over the past few months has offset revenue declines during the pandemic — and given Sitka some unexpected options in its finances next year.
Uncertainty continues to be a central theme as the Sitka Assembly looks toward the budget for next fiscal year. When the assembly met on Thursday (1-21-21) for a budget work session, it discussed the FY22 budget, focusing on some of the challenges and unknowns.
City staff anticipate a budget deficit of around $1.5 million, due in large part to a COVID driven decrease in tourism and sales tax revenue. But careful budgeting last year led to at least one silver lining. City Finance Director Melissa Haley said her department was expecting a projected surplus of 1.5 Million in FY21.
She said they could carry over that surplus to cover the FY22 deficit, keeping the budget relatively flat. Or they could tackle the deficit by making cuts to services or finding other revenue sources to tap. The initial budget planning for FY22 included no new capital appropriations.
View Haley’s budget presentation here
The city’s biggest budget item is school funding, topping out around $7 million dollars, give or take, each year. Last year the assembly agreed early on to fund the Sitka School District to the maximum, or “the cap.” Member Thor Christianson, whose wife teaches in the elementary school, said making the call early made the budgeting process much easier.
“The investment we make in schools every year, to me, is one of the cornerstones of our city government…it’s an investment we have to make,” he said. “Especially with the flat state funding, I think we need to be at or near the cap from the get go.”
The state sets the “cap” and it is substantially higher this year than it was last year. And there’s still no word on whether the district will receive Secure Rural Schools funding, which can go toward schools or roads in communities like Sitka that are surrounded by federal land. Haley said in the current draft, staff has budgeted flat funding for schools, and didn’t include the federal funding, just in case.
“If we were to add funding to the cap, at this point we would be looking at going $600,000 more into our fund balance,” she said.
Member Rebecca Himschoot, who works as a teacher in Sitka, said she would support funding the school district to the cap. Kevin Mosher wanted to wait until the assembly meets with the school board in February before committing to a number. Most assembly members didn’t weigh in on the school funding decision.
Even with the budget challenges, city departments are budgeting for more staffing in a few areas. Administrator John Leach asked for assembly guidance on a few positions that aren’t currently funded–a public relations director, a procurement specialist, an assistant fire chief, and another police dispatcher, who would help the city centralize its police and fire dispatch. Some assembly members voiced support for the PR and procurement jobs, but several wanted more information on the dispatcher and assistant fire chief positions.
The assembly is still in the early stages of the budgeting process. They’ll have their next budget meeting on February 4 with the Sitka School Board.